Ministers who want to re-balance the economy could learn much from the German approach to industry, says a new report published by the Trades Union Congress on 17 January.
It said that if the UK is to end its over reliance on the financial services a renaissance in manufacturing needs to take place.
The ‘German lessons: developing industrial policy in the UK’ report looked at how the government’s approach to industry in Germany and the UK has differed since 1945.
The report came up with a number of suggestions as to how a more strategic, intelligent and active approach to government industrial policy could reap huge dividends for British manufacturing and the UK economy.
It said that there there was a a great deal of emphasis on large firms and on the very smallest companies in the UK, but little thought or support given to medium-sized enterprises.
Yet in Germany, the ‘Mittelstand’ – a network of mainly family-owned mid-sized companies – is the backbone of the economy and a crucial part of the German supply chain.
The report argues that Germany’s economic system, which brings management and workers together and has a strong positive role for unions and employers, gave the country’s firms a very definite advantage as the global economic slowdown began to take hold.
The TUC publication also says that talented graduates in the UK are less likely to choose a career in industry than they are in Germany, and this combined with a three-year vocational training programme provides a massive boost to the country’s manufacturing firms.
Britain’s relative lack of apprenticeship schemes, which has typically been a key entry route into industry, lags considerably behind its German counterpart despite a recent drive that has been supported by Prime Minister David Cameron.
Around 40% of school leavers are taken on as apprentices by German employers for three years, whereas in the UK only 6% of 16-18 year olds were on apprenticeships in 2010 and most of these were for little more than a year.
TUC general secretary Brendan Barber said: “The UK has much to learn from Germany – it is the powerhouse of the European economy and its politicians have never lost sight of the value of their manufacturing sector.
Mr Barber added: “Too much government policy has amounted to little more than tinkering at the edges, when what we really need to deliver a vibrant industrial sector is a new active, interventionist approach to manufacturing.”
The TUC’s stance is that it’s not too late for British manufacturing and that a new approach to skills, investment and procurement could help to improve the state of manufacturing in the UK.