Should British business learn from Germany?
According to Ed Milliband, leader of the opposition, Britain could learn a lot from Germany. He believes we should create an economy more like the strong, skilled economy enjoyed by the Germans, with more manufacturing based businesses, and small and medium sized enterprises. Business insurance holders should aspire to be more like continental Saxons, rather than Anglo Saxon’s and take a leaf out of Germany’s book. It’s not just the leader of the opposition who thinks British business and the economy could learn from Germany, but also the view of some highly respected economists and political scientists too. They all think we would be better off if we adopted some of the approaches and attitudes that make the German economy strong.
Six things we might want to learn from Germany.
These aren’t Milliband’s policies, or promoted by a political party, but comprise a few observations and some opinion on the German way of doing things and how we compare. They include:
1. Increased the skills of our workforce. In Germany there is a much smaller difference between the pay of the workers and their bosses – and that’s not because of generosity or political persuasion, but because the average worker in Germany is well qualified and doing a skilled job, hence commanding higher pay. Skills should be tailored to the industry we have to make sure this newly skilled workforce has jobs to go to.
2. Use business and workforce led organisations as a way of understanding the labour market, addressing skills shortages and then filling those gaps. In the UK at present, organisations like the CBI and the trade unions tend to confine themselves to policy and lobbying activities. In Germany they have a more direct approach to the problems of industry, they roll up their sleeves and support their industry with training, development and joint initiatives.
3. We should invest our savings rather than take on large mortgages. To achieve higher rates of savings it would of course help if we could earn more – see point number one, but having said that, Germans tend to invest their savings, rather than put them into the house market. Historically though, there’s more reasonably priced rental property in Germany and far more Germans rent rather than buy. This strong and stable rental market and a German reluctance to take on ever bigger mortgages, has stopped the German economy being fuelled by a property bubble. In Britain we’re all too familiar with the consequences of over inflated property prices and the difficulties young people now face in finding a home.
4. We should make sure our educational system prepares our children for work. German schools frequently have close relationships with local industry to make sure the things they are teaching children prepare them for employment. We are expanding our apprenticeships schemes but more could be done to ensure that school leavers are better prepared for employment in the workplace.
5. We should invest in manufacturing again. This will give us a sense of national pride, balance the financial services side of our economy and bring employment back to industrial areas that are no longer offering full employment. Germany has always invested in manufacturing to ensure it has one of the most high tech integrated manufacturing economies in the world. German manufacturing is based on strong German brands like BMW, Audi and Bosch – that support a diverse engineering and component industry – British brands, from cars to vacuum cleaners have all long since moved out.
6. We should take a long term view of economic growth to support employment. This may mean offering incentives for business investment and growth and make sure our banks serve our businesses with long term support and lending.
What do you think?
Do you think we can learn from Germany?
What would you do to strengthen our economy?
Are there other countries that set a better example than Germany?