A TUC report based on research produced by the New Economics Foundation

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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.

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.