From the TUC

German Lessons come to Parliament

13 Mar 2012, by in Economics, Politics

Today’s Parliamentary event to discuss the TUC’s ‘German Lessons’ report was fascinating, challenging and, at times, provocative – just how a good debate should be! There was a tremendous amount of goodwill in the room, as politicians, policy specialists, trade unionists and industry representatives all sought an active industrial strategy and were keen to learn from the German experience.

Frederic Speidel, IG Metall’s full-time officer from Volkswagen in Wolfsburg, flew to London for the event. Frederic gave a strong defence of Germany’s Social Market Economy, but he emphasised that supporting this model is a political decision. It is opposed by some German conservatives and there has been a de-legitimisation of the model in recent years. However, the Social Market Economy, and the co-determination system, had paid dividends. Some of the main features of Germany’s response to the economic downturn – short-time working, the car scrappage scheme – had come from trade unions. There’s a lesson for us here: if we want a new economic model in the UK, we will need to fight for it and then fight to defend it.

Paul Everitt of the Society of Motor Manufacturers and Traders, giving an employers perspective, argued for a robust, internationally recognised industrial policy that delivers long-term certainty for UK businesses and international investors. Paul said that growing manufacturing and rebalancing the economy must be national priorities for all parts of government and all political parties. A long-term approach is required to provide the certainty and security that international investors need to commit funding to the UK.

Chuka Umunna, the Shadow Business Secretary, reflected on his own recent study visit to Germany. He spoke of the famous ‘mittelstand’, which is often described as family-run, but with a wide definition of what constitutes the family – in this case, it includes employees of the company as well. Chuka spoke of the parity of esteem between academic and vocational skills in Germany, where working in industry is respected and encouraged. Chuka also described the Sparkassen, who see it as their job to provide access to finance for local businesses. Furthermore, Germany’s KfW was able to double access to finance immediately when the economic downturn hit in 2008.

During the discussion, hard questions were asked: Is the UK’s financial sector just too big, crowding out manufacturing? Was the last Labour Government simply too timid on industrial policy, until the final years of its life? Had trade unions done enough to encourage works councils? What does a positive definition of workplace flexibility look like? What more can trade unions do to become seen as an essential balance to the power of capital, as they are elsewhere, by trade unionists and non-trade unionists alike?  

Needless to say, we agreed on a lot, disagreed on a fair bit and ended up with many questions unanswered. But these are the debates that the policy community must have and if the meeting was feisty at times, it was comradely throughout. We need more discussions like this. Thanks to everyone that joined in.