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Home Opinion Industrial policy and skills strategy: a new partnership for growth?
Growth • Skills • Trade Unions

Industrial policy and skills strategy: a new partnership for growth?

Iain Murray - 12 February 2015

Why employee voice in the strategic direction of skills matters for industrial policy

For too many years industrial policy in the UK was sidelined, especially during the domination of free-market political ideology in the 1980s and 1990s. More recently, things have begun to change, albeit at a relatively slow pace.

The TUC has consistently encouraged policymakers to engage with a modern industrial policy that actively promotes growth in those industries and sectors where UK PLC has a competitive advantage. Lessons learned from leading international economies have been a key factor in changing the tenor of the political debate in recent years.

An influential TUC policy report – German Lessons – published in 2012 challenged the government to recognise the importance of industrial activism and to draw on the experience of the German economy. This report also made a strong case for the benefits of a coherent industrial policy for regenerating many parts of our manufacturing sector, with the knock-on benefit of delivering more high-skilled jobs paying decent wages.

Success on this front is essential if we are going to make any headway in reversing the dramatic decline in household income since the recession. It could also go some way to rebalancing the north-south divide by reinvigorating those parts of the country with the greatest dependence on manufacturing employment.

The ‘social partnership’ model

There are a number of important features of the German industrial model, and similar models seen in many other northern European countries, that we can learn from. One key feature is the crucial interrelationship between industrial strategies and human capital strategies and the partnership arrangements that have been established to connect and align industrial priorities with skills priorities.

In much of northern Europe this policy picture is translated into reality through a ‘social partnership’ approach involving a close collaboration between government, employers and trade unions. This social partnership operates at different levels, including playing a key role in agreeing national skills strategies and the overall regulation of the training system.

At the heart of the approach are industry-led collaborations involving employers and trade unions that oversee the development of high-quality training, especially through the apprenticeship system. Under this model, sector bodies, jointly led by employers and trade unions, play a vital role.

This is complemented by other features of the skills system, including a commitment to collective agreements on training standards across sectors that all employers generally adhere to. In many instances these collective agreements include provisions to ensure that all employers invest in learning and skills through training levies or similar arrangements.

At the heart of the social partnership approach is the rationale that the skills needs of employers and individuals have to be balanced out and that trade unions have a clear responsibility for articulating employee voice in this respect.

It is not only the TUC and its affiliated unions that argue that we have much to learn from the social partnership model. The national skills body that advises government – the UK Commission for Employment and Skills – is also convinced about the urgent need for a new approach.

It has recently published a ‘skills statement’, supported by the TUC and CBI , highlighting that “compared to countries with strong vocational systems such as Denmark, Germany and the Netherlands, industry leadership and partnership working in the UK is underdeveloped.”

A key recommendation in this statement is that “employers, working with each other and with their employees and trade unions, should raise the bar on skills in sectors, regions and supply chains [because] collaboration is vital to building the skills we need for competitiveness.”

With government support, the UKCES has also facilitated the development of new industrial partnerships in eight sectors ranging from aerospace to the creative industries. Many of the new partnerships are being facilitated by Sector Skills Councils, the network of sector bodies established by the previous government.

The industrial partnerships are testing out a new skills model where government subsidy, complemented by direct investment from employers, is funding apprenticeships and other training in line with the industrial strategy agreed for the sector in question. Similar initiatives are in train in the devolved nations, such as the Industry Leadership Groups in Scotland.

The TUC’s learning and skills organisation – Unionlearn – has been supporting the involvement of unions in the new partnerships, while also continuing to support union engagement with those SSCs without links to an industrial partnership.

Unionlearn is also involved in lobbying for ‘employee voice’ to be given greater priority in particular sectors and for trade union priorities for the workforce to be addressed across all sectors.

A related reform designed to promote an industry-led approach to skills development is currently being applied to apprenticeships in England. In this case ‘trailblazer’  partnerships have been established and given a remit to develop new apprenticeships standards for specific industries and sectors.

Developing an industry-led approach to skills

The TUC is broadly supportive of the concept of integrating industrial and skills strategies and developing industry-led approaches to skills development, including employers and unions having greater ownership of, and responsibility for, apprenticeship standards.

However, the TUC believes that further development of this policy approach would require a number of significant reforms to the current direction of travel.

First, despite the recommendations of UKCES, there is no obligatory commitment that sector skills bodies – whether industrial partnerships or SSCs – should involve trade unions in their operations at a strategic level. Therefore the concept of ‘employee voice’ is weak and we are miles away from anything closely resembling a social partnership model.

Another concern is that funding for the SSCs has declined in recent years so many sectors of the economy no longer have a viable sector body representing their interests. Under the previous government SSCs were obliged to have unions represented at board level  and received core funding.

Current Labour party policy is to overhaul SSCs and Local Enterprise Partnerships  “so that employee representatives are equally involved”. If sector and local bodies operate without a robust employee voice, employer interests naturally dominate and major issues that unions prioritise tend to slip down the agenda.

For example, unions have long campaigned to highlight the poor quality of too many apprenticeships and the scandalous contravention of the minimum wage (the latest government survey shows nearly a quarter of apprentices not being paid the legal minimum rate). Unions have also called on policy makers to challenge employer investment in skills and to look at the wide range of innovative agreements by employers and unions in other countries that ensure employers pay their fair share. The most authoritative UK survey of employer skills has shown one stagnant trend over the years – one-third of UK employers offer no training to any of their staff.

Trade unions are banging on the door to make a difference on learning and skills in the workplace. Through the support of the Union Learning Fund and the TUC’s Unionlearn, over 30,000 Union Learning Representatives have been trained in the past 15 years.

As a result of this, hundreds of thousands of employees’ lives have been transformed by union support for the learning agenda, ranging from young apprentices entering the workplace for the first time to older employees who need support to progress their careers.

But employee voice, articulated through the union contribution to the strategic direction of skills, remains a marginal issue in the policy debate. Until this changes we will fail to make real progress in building a strategic approach on skills that supports a modern industrial policy.

Iain Murray is senior policy officer at TUC Unionlearn

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