How industrial change can be managed to deliver better jobs A TUC report based on research produced by the New Economics Foundation . Acknowledgements We want to extend thanks to those who offered time through participating in interviews and other guidance, especially: Gylfi Magnússon – economist, associate professor at University of Iceland, and former Minister of Economic Affairs. Antanas Sipavicius – travel company owner of Back to Travel Iceland Sandra Mjöll Jónsdóttir – CEO and founder of Platome Biotechnology, Iceland Gudmundur D. Haraldsson – member of ALDA think-tank, Iceland Magnús Már Guðmundsson – BSRB trade union, Iceland Kristján Guðjónsson – presenter and producer on Culture at Fréttastofa RÚV Iceland public radio Charlotte Billingham, Senior Policy Advisor, Foundation for European Progressive Studies, Belgium Laura Gonzalez de Txabarri, Head of the International Department, ELA trade union Ana Sancho, Metropoli-30, Bilbao Jaron Rowan, author and lecturer in Cultural Studies at Design College of Barcelona Dr Adrian Bua Fellow at De Montfort University, Centre for Urban Research on Austerity Oriol Estela, Director of PEMB, Barcelona Robbert Coenmans - Tilburg University academic Ron van Baden - FNV trade union, regional manager for Southeast Netherlands Ronald Tekker – former academic at Tilburg University, Netherlands Brendan Martin - Managing Director of Public World and Buurtzorg Britain & Ireland © Trades Union Congress Congress House, Great Russell Street, London WC1B 3LS 020 7636 4030 www.tuc.org.uk For more copies call 020 7467 1294 or email [email protected] Please ask if you need an accessible format. Printed by: TUC Cover image by: Getty Contents Executive summary ................................................................................................................................................ 4 Introduction .............................................................................................................................................................. 6 From principles to practice ............................................................................................................................ 6 An economy in deep transition ......................................................................................................................... 8 From making things to delivering services .............................................................................................. 8 How will the change happen? .................................................................................................................... 14 Case studies ........................................................................................................................................................... 18 Case study 1: Bilbao - culture and cooperation in the Spanish Basque Country ................... 18 Case Study 2: Iceland – adaptability and strength through equality .......................................... 25 Case study 3: Eindhoven, Holland – a caring and collaborating knowledge region, with an industrial base .................................................................................................................................................. 33 Learning for the UK – empowering local strategies for a well-managed transformation ....... 40 1.People feel secure and have a stake in their local area ................................................................ 40 2. Genuine opportunities for participation in decision making .................................................... 40 3. A realistic sense of long-term opportunity and social mobility in local area ..................... 41 4. Proactive, positive interaction between state, unions and market ......................................... 42 Policy recommendations from the TUC based on the report’s findings ................................... 43 3 Executive summary Moving to a net zero-carbon economy and managing a fair transition to an economy with greater use of technology, whilst maintaining and improving livelihoods, is a major task ahead of the UK government in the coming decades. Whilst the details of an industrial policy to direct this change are important, without a visionary state taking a lead on social dialogue at national and local levels to ensure policies are responsive to the needs, capabilities and cultures of the people and places they will effect, the necessary transformation will fail. The UK has an appalling track record on managing deep industrial change in a just way. Given the critical juncture we are at, allowing markets to franticly impose change upon industries and communities is irresponsible. Leaving these inevitable changes to the whim of global market forces will only deepen existing political divides and accentuate unsustainable economic imbalances. It is important now more than ever that policy-makers take steps to understand the nuts and bolts of industrial transformations in practice, and how they can be shaped by the state, employers and unions representing the collective voice of the workers and communities affected. As a contribution to what is a significant challenge we have looked at three case studies of places in Europe that have experienced a major industrial change in recent years: Bilbao, in the Basque Country, Eindhoven in Holland and Iceland, to learn from their successes and failures and apply to a UK context. We found that: In Bilbao, strong public participation and local autonomy over policy and finance were ingredients for an impressive transformation of a city that experienced a devastating flood and intertwined social, economic and political crises. In Eindhoven, public investment has fostered a culture of cooperation within the business sector enabling innovations in health and social care among other new technologies to develop in synergy with the city’s industrial past. In Iceland, a dogged commitment to social provision and democratic accountability, supported by a strong union movement, has seen a country successfully navigate a potentially crippling financial and economic crisis with impressive levels of income and gender equality maintained. From these examples we identify four critical success factors for industrial change done well: People feel secure and have a stake in their local area. There is a strong social safety net to foster long-term opportunity in an area. There are genuine opportunities for participation in decision-making. There is proactive, positive interaction between state, unions and businesses. 4 We make a number of recommendations for the UK, including: setting the development of quality jobs as the test for success of the industrial strategy ensuring that plans for industrial strategy or economic development are overseen by a social partnership approach allowing unions to bargain with employers to maximise employment standards across sectors delivering a national entitlement to skills, to give everyone the confidence to adapt to changing demands making an increase in good jobs the clear test for local industrial strategies bringing together unions, employers and citizens at local level to develop a clear vision and plan for their area using local employment charters to drive the development of good work across regions using social value procurement to support high quality employment standards, local labour and supply chains and other community benefits. Industrial transformation of the kind that must happen over the coming decades must be treated as an opportunity to improve lives and livelihoods – but this will only be realised if a different approach is taken. Without an active state that is willing to set aside market ideology and work with people and places towards a shared goal, the crises that currently beset UK industry and many of the places that depend upon it are only likely to deepen. 5 Introduction Since the 2008 financial crash, industrial strategy has become an in-vogue topic among UK politicians, with a shared ambition across parties to boost productive activity and exports. But despite the growing consensus that industrial interventions are needed, economic policy over the same period has remained much the same. We have been locked into a ‘market knows best’ mind-set and are suffering the consequences, with the decline, flight and collapse of prominent firms making the news month on month (e.g. Interserve, British Steel). Processes of industrial transformation away from productive activities like manufacturing and towards a service-based economy have marked a huge shift in the makeup of the UK economy, but there has been a glaring lack of involvement by successive governments in managing this change, or cushioning the blow to affected workers and their communities. This abdication of responsibility and commitment to a “hands off” approach to industrial transition is of course an intervention of sorts: and the implications are felt and paid for across the economy. A decade of wage stagnation, work casualisation and personal debt growth are symptoms of a continued lack of any industrial plan. To meet this gap between rhetoric and action, many have put forward the need for a “mission driven” approach to industrial strategy – centring a plan on the ambition to solve specific and concrete societal, economic or technological challenges.1 But what is still so often missed out from these discussions is a strategy for addressing the specific challenges that lie underneath a guiding mission. In