Greg Walton in the Daily Mail 15 August 2012 reports on a recent survey revealing that German firms are shocked by the low quality of apprenticeships in the UK.
Greg Walton in the Daily Mail 15 August 2012 reports on a recent survey revealing that German firms are shocked by the low quality of apprenticeships in the UK.
Sunday 11 March 2012 – Bob Bischof appeared on BBC Radio 4′s ‘Analysis’ to share the ideas from Germany that could help improve the UK’s fortunes.
Presenter Matthew Taylor travels to Bob’s birthplace, Hamburg, to discover how apprenticeships are set up to buffer businesses and workers against hard times.
You can listen to the programme in full here: http://www.bbc.co.uk/programmes/b01cvkg6
The BBC article by Matthew Taylor is at http://www.bbc.co.uk/news/business-17213556
As published in the Guardian: by David Marsh and Robert Bischof. http://www.guardian.co.uk/commentisfree/2012/jan/26/hire-and-fire-destroyed-uk-jobs
These days we tend to talk about the divisions in Europe as one between net creditors and debtors. In reality this is just a sideshow. There is a much more fundamental gulf, hinted at by Angela Merkel in her Davos speech yesterday: between countries with organised industrial training systems such as Germany, the Netherlands, Belgium, Scandinavia, Austria and Switzerland – all currently with jobless rates of between 3% and 7% – and those with much higher rates of unemployment, often in double digits, in peripheral Europe.
The issue pits Anglo-Saxon precepts of free market regulation against the Germanic “Rhineland” system of managed capitalism, with modern apprenticeship systems built on a long-term compact between labour and employers. In the years before and immediately after the euro’s birth in 1999, the peripheral countries of the European monetary union (Emu) often followed Anglo-Saxon principles by liberalising parts of notoriously inflexible labour markets. “Hire and fire” became the motto.
Initially this seemed to work. But as debt market conditions worsened and growth stalled after the 2007-08 financial crisis, Emu’s periphery has been left seriously exposed by the failure to replace unproductive regulations with new mechanisms to generate jobs.
In the battle between rival systems, “Rhineland capitalism” appears to be winning hands down. In the two years since the global economic downturn in 2009, Germany has expanded employment by 1.8m, while the UK, US, France, Italy and Spain have shed 7m jobs. In 2007, when most other countries were nearing the end of a boom driven by excess credit, Germany had the highest unemployment rate (8.7% of the workforce on a harmonised basis) of the group of seven leading industrialised countries. Yet in late 2011, according to OECD figures, German unemployment, at 5.2%, was the lowest in the G7 apart from Japan.
While the UK struggles with record youth unemployment, Germany’s youth unemployment rate is one third of the OECD average and one eighth of the rate in Spain. High youth unemployment is the most pressing problem in Europe right now – Merkel acknowledged as much when she admitted that mere austerity would make the European project meaningless for the next generation of young people. “Structural reforms that lead to more jobs are essential,” she said in her opening statement.
But Merkel is drawing strength from Germany’s own experience with low unemployment in the mid-noughties, and she is right to do so. While the German labour market underwent some Anglo-Saxon-style deregulation under Gerhard Schröder in 2003-2005, it still places more emphasis on employers’ freedom to build long-term loyalty between employers and workers. These relationships are embedded in a strikingly different cultural approach to industrial training, closely tied to the German tradition of family-owned Mittelstand businesses buttressed by long-term savings that take a generational approach to assembling skills and technology.
British politicians are keen to talk about “skills”, but at the same time they are reluctant to let go of the flexible labour laws that have set them apart from the European mainland in the past. They can’t have it both ways. Employers who do not have a sense of social responsibility for training are unlikely to be durably persuaded to hire apprentices through one-off state payments. Instead, governments should consider building comprehensive vocational training schemes that could be funded through a reduction in the social costs ensuing from unemployment. Tinkering with apprenticeship programmes on a piecemeal basis, as has been done in the UK, is unlikely to yield long-term results, as such half-hearted reforms result in expensive and wasteful systems that lack both scale and content.
And it’s not just the German system of apprenticeship schemes that could do with being copied. One of the main reason why Germany’s economy was able to recover so quickly after the downturn was the system of short-time working support (Kurzarbeit), introduced in the 1920s and extended in recent years.
Funded by an employment insurance levy, it pays for firms to keep workers for six to 12 months, provided employers can show their businesses are in a cyclical and not a structural downturn. Imagine a small engineering firm that ran into financial trouble in 2008: rather than letting go of the 17-year-old apprentice who had recently joined the firm, it would have been able to keep employees on board and then benefit from their experience when the economy was back on its feet. Even if the company had gone bust, the apprentice would by law have been sent to another company.
Sir Anthony Bamford, chairman of UK excavator maker JCB, points out that his company was forced to shed more than 20% of staff in Britain when production halved in 2009. By contrast, the Kurzarbeit system enabled him to keep all his labour force in Germany.
Such examples underline how Germany’s previously unfashionable model has enabled it to become the industrialised world’s premier job machine. As the economic climate darkens, 2012 will be a difficult year both for Germany to hold on to its advantages and for other countries striving to follow the German lead. Yet unless they start to lay the groundwork for longer term gain, time for catching up will soon run out.
This letter appeared recently in the Times and is republished here:
“Instead of accepting the CEO’s whining about high taxes and too much regulation, the Prime Minister could have interrogated them at the Times CEO Summit about their abysmal performance in world markets. As we heard, Britain has been exporting more to Ireland with 4.5 million people than to the BRICS countries (Brazil, Russia, india, China and South Africa), with nearer 4 billion people. German companies have to cope with far more regulation and carry substantially higher payroll costs, but have managed to reduce unit labour cost by more than 20 per cent in the last decade and raise productivity. Moreover, Germany was until 2009 the largest exporter in the world.
Britain, on the other hand, had a more than 20 per cent devaluation of sterling but British exporters have not taken advantage with higher sales volumes. Mr Cameron is right to try to turn bad regulation into useful regulation, but he should look at taxing profits which stay in companies and are re-investe in markets and products differently from those that are paid in dividends and share buy-backs.
In the absence of credit-induced consumption and state spending to drive the economy, growth depends to a large degree on our companies’ performance over the coming years. One precondition is to increase the skill base. Here again, should the Government beg companies to engage in its ambitious apprenticeship programme or should there be a training levy, against which companies can reclaim some of the cost of training? Either way, feeding companies carrots does not seem to work: more stick might work better.”
To make this a reality, certain changes have to be made to the present system regarding the content of the learning offering. In addition, it needs simplifying and a higher degree of standardisation to achieve the necessary scale, which in turn will make it more cost-effective.
These changes are of course primarily designed to make apprenticeships more desirable to youngsters as well as employers. A lot of what is on offer at present should stay in place and form the basis of an upgraded, attractive first step on the ladder of a career for young people.
Eventually the Universal Apprenticeship should replace all of NVQ1-4, Modern and Advanced Apprenticeships. It would need high level political and business support, together with a PR makeover.
Vocational should therefore mean that young persons’ differing talents – academic, artistic or practical – are recognised as equally useful in a “Big and Inclusive Society”. Accordingly, young people need to be offered corresponding pathways – firstly, from school into the world of work and after a successful completion of the first step – the Universal Apprenticeship, further career progression opportunities to fulfil their aspirations may they be in trades, crafts, technical, administrative or other occupations.
Education should mean that school leavers aged 16 to 19, by choosing the Universal Apprenticeship are not just taught the ins and outs of a specific job in a narrow manner, but that they continue their education in general terms, too.
Enhancing their social and communication skills would be some of the aims of this part of their further education. This will lay the necessary foundation to enable the person to move off “the shop floor” and reach “the top floor” of his chosen profession, whatever it may be. This part must be the responsibility of vocational colleges, as it needs real teaching abilities. Of the total college based part of the apprenticeship, it should be around one third of the learning program, whilst the other two thirds are the theoretical part backing up the in-house company job specific training.
The largest part of the Universal Apprenticeship, namely Training, ought to be based on standardised frameworks of in-company/organisation learning.
This would typically be over a period of around 2-3 years, for which the apprentice and employer enter into a training contract. Ideally the frameworks should give the apprentice as holistic an insight into their work environment as possible.
This gives the trainee/employees more self-esteem, empowers them to work more autonomous with less supervision and ultimately is more flexible, cost-efficient and productive.
The apprenticeship training contract should be largely standardised and safeguarded by law. To complete an apprenticeship successfully there should be a recognised and meaningful certification process, to ensure successful apprentices achieve good standing in society as young professionals.
In short, a successfully completed apprenticeship should not be the end but the beginning of a career for those with aspirations.
German Industry UK (GIUK) has been in discussion with John Hayes MP, Minister of State for Further Education, Skills and Lifelong Learning. Conversations regarding the development of German models of vocational training to benefit the UK economy have led GIUK to develop a proposal for progressing UK Apprenticeship schemes to become more successful.
Britain has been pretty good in training its elites but has neglected the training of “foot soldiers” for decades. If one wants to turn innovations into successful products, one needs both, and if David Cameron’s “Big Society” is to have any meaning in further education then his government has to look at apprenticeships in a new structured manner.
John Hayes himself recently made an announcement regarding the government’s commitment to progressing Apprenticeship schemes in the UK, saying “We must create a radically new model for workplace training, with apprenticeships at its heart”.
In view of John Hayes’ statement, during a meeting between GIUK and Mr Hayes on 3 February 2010, about his interest in bringing key elements of the German Dual Vocational Training System to Britain, GERMAN INDUSTRY UK has developed the following proposal.
GIUK is of the opinion that the present UK apprentice training system requires simplifying, restructuring and more relevant content, for companies to buy into it.
Since successive governments largely abandoned apprenticeships, a vacuum was created, which has been filled with a myriad of well-meaning but chaotic initiatives, duplicating many efforts and lacking structure and transparency.
From comparisons with continental systems we are also sure that it is possible to reduce cost drastically whilst increasing transparency and efficacy.
The German government spends around Euro 1,9 bn per annum on its Vocational Training Colleges and the certification of apprentices through local chambers of industry and commerce. German industry spends around Euro 18.5 bn p.a. net on training apprentices. Around 650,000 youngsters (or 58% of school leavers) enter into apprenticeships every year.
The completion rate is always well over 90%. In total, there are approximately 1.6 million youngsters training as apprentices in Germany, at any one time, at a cost to the state of about Euro 1,200 ( GBP 1,000) per person p.a. and about Euro 12,000 ( GBP 10,000) per person p.a. for the employers.
Setting up of a small working group to:
A budget needs to be agreed by the Minister for Skills.
Once the basis of the above has been agreed with the government and work commences, GERMAN INDUSTRY UK will actively support the new apprenticeships and will encourage its members to take on as many young people as possible as apprentices.
GERMAN INDUSTRY UK – THE VOICE OF GERMAN INDUSTRY IN THE UNITED KINGDOM
Ymwlch Isaf, Criccieth, Gwynedd LL52 0PW · Telephone: 01766 523 113
Email: email@example.com · Website: www.gi-uk.co.uk
Bob Bischof will be co-chairing the upcoming German-British Forum Conference on Monday 22 and Tuesday 23rd November this year.
Entitled Investment in Skills & Productivity: Better training as the key to economic dynamism, the conference will address pressing macro- and micro-economic themes around how to ensure young people are being trained in the right ways to address the future needs of modern European economies.
Europe as a whole recognises that a high-skill, high-productivity economy provides the most effective platform to boost competitiveness and enhance well-being.
As Peter Loescher, Chief Executive of Siemens AG, put it at the Annual Dinner of the German-British Chamber of Industry and Commerce on 9 June 2010 in London;
German Industry UK (GIUK) has been at the forefront of efforts by German businesses in the UK to attempt to provide in Britain a framework similar to the German Dual Training System.
GIUK has held constructive meetings with Ministers from both the Labour government and the new Conservative-Liberal coalition administration and has now set up a working group within the Department for Business, Innovation and Skills to determine how this can be done for England.
The new UK government has made tackling the skills gap a significant priority in its efforts to spur economic renewal. There is considerable interest in learning lessons from Germany, where equipping the workforce with competitive skills through the vaunted apprenticeship and vocational training system, in partnership with industry, has long been a centre-piece of economic policy.
The presence of a large number of German companies in the UK has added impetus. Underlining this point, Robert Bosch, BMW, EON and Siemens are all giving support to the conference.
The gathering will highlight the role of the Technician Council, a new body set up in the UK to promote a new non-academic route to technical excellence for employees in many different fields.
Numbers of so-called NEETS (young people Not in Employment, Education or Training) have risen to close to a million and over a million 16-19 year olds are out of work – the highest in Europe.
In the Lisbon Treaty of 2000 European leaders committed their governments among other aims to the promotion of Vocational Education and Training (VET) and expressively recognized that it has not only an economic but also a strong social dimension as Germany proves with the lowest unemployment rate among young people in Europe.
In the follow-up meetings in Copenhagen in 2002 (Copenhagen Declaration), Maastricht 2004 and Helsinki 2006, targets were set and monitored to improve and modernise vocational training by 2010 for young and old and start the process of a European Vocational Framework, which would allow more mobility between countries and recognition of each other’s certification regimes.
In the Brussels follow-up meeting in 2008 it was recognized that most of the targets set for 2010 were going to be missed, as they were too ambitious. However, as times are changing now, the problem is supposed to be addressed with renewed vigour or will it? There is some doubt that there is real energy spent on it.
GIUK Survey on Employability Reveals Confusion
German Industry UK (GIUK), an association of German businesses in this country, launched a survey of its members in 2008 regarding employability and availability of skilled people in the UK. The survey showed that German managers were confused about the diversity of offerings in vocational training and certifications and considered the general lack of young people, who would qualify for vocational training a drag on their businesses. My own experience in UK manufacturing and logistics bears this out.
In October 2008 and with some prodding from the Prime Minister, GIUK went on a 3-day fact finding tour to Germany with David Lammy, then Minister for Skills and three assistants to study the German dual apprenticeship system and visit a number of firms. The team was impressed. The minister promised to engage with GIUK, however before he could act he was promoted and handed over to Lord Young, who promised to pick up where David Lammy had left off. Three months later he was moved on.
German Industry, which employs directly and indirectly around a million people in the UK, had promised more apprenticeship places in return for involvement in the curricula and the overdue simplification and streamlining process of apprenticeships.
GIUK – speaking for its members – is clearly saying that the present system is preventing German business from being as competitive in their UK operations as elsewhere and demanding change. This is particularly important in manufacturing, however skills are important everywhere including the public sector.
We believe that at the heart of the problem in the UK is an at best well-intentioned and at worst spin-inspired attempt to make everybody into a “kind of academic” in the so-called “knowledge economy”.
Questioning the “Knowledge Economy”
What is the definition of the “knowledge economy” anyway? We don’t think it included in the minds of most politicians and educationalists skilled technicians, plumbers or carpenters. By going hell for leather for academia, it “devalued as an unintended consequence the craft skills and vocational training per se” – so the last but one Minister for Skills Lord Young at a German-British Apprenticeship seminar in London organised by GIUK.
The second big slogan of the Blair era was “no jobs for life”. In our view it was just as misleading and un-differentiated as the “knowledge economy”.
“No jobs for life” sounded like encouraging employees to job hop and a fig leaf for employers for a “hire and fire” culture. It is of course based on the idea of old industries versus new, on “creative destruction” and the supremacy of the service sector. There is some merit in all this, but it sits badly with youngsters starting off their careers. Why train, when I am changing jobs permanently? At Volkswagen and Vauxhall alike there are third generation of employees and they are proud of their commitment to their companies.
The new “Skills for Life” slogan and the creation of a “technical class” sound good but need substance.
GIUK can help.
Government thinking is changing – and not a moment too soon. The PM himself should re-state and clarify government policy in this area. Job hoppers do not produce quality work nor enhance productivity in companies as a rule.
The economic downturn and the crises of confidence in the present economic model present as much a problem as a rare opportunity to redraw the lines. It is safer again for politicians to look east towards Europe for values and inspiration after the disaster created by following the US lead in so many areas over the last decades.
The economy clearly needs rebalancing and Brits will have to look again to doing things themselves rather than looking for Johnny Foreigner to make the dishwashers and come over here to repair them, when they break down.
Call for Culture Shift
If apprenticeships and training are to be taken seriously and beyond political fad, there needs to be a change of culture regarding skilled employees – or human resources generally. Highly skilled jobs need to be better safeguarded during cyclical downturns.
During this recession unemployment in the US rose by over 8 million, in the UK by about 1.4 million and in Germany the jobless number rose by just 220,000, although the latter has been experiencing the biggest economic downturn since the war. Who is going to be ready and first out of the blocks, when things get back to normal? Who on the other hand has to spent £10,5bn so far in this crises alone on redundancy payments and later probably the same again in recruitment and training costs let alone the cost of the missed chances in the market place in the next upswing?
Why can German companies hang on longer to their skilled employees? The answer is simple. As they pay half the hypothecated employment insurance (2.8% of gross income), the employers are entitled by law to apply for short time work (Kurzarbeit) in a cyclical downturn. This means, if there is only work for two or three days a week, they can keep all their staff and the employees get paid for the full week. Unemployment benefit is also paid out of this pot.
During times of low unemployment and little or no short time working the hypothecated pot swells up and acts in an anti-cyclical manner in downturns. Germany’s pot was quite full, when this recession hit.
This 2.8% pot incidentally also pays for the vocational college education of apprentices and the advice they are given before, during and after their apprenticeships through the jobcentres and for their certification/examination by the Chambers of Industry and Commerce.
The cost of a proper apprenticeship training system could be recovered easily also by “social cost savings”, which could be achieved from a reduction in the hidden costs in Britain occurred through the highest youth alcoholism and drugs dependency, teenage pregnancy, young offenders and truancy rates in Europe – in other words the cost of the so-called “lost generation”.
To summarize what we believe is necessary –
If we want to be serious in this country about training and social cohesion, it is our view that these points need to be addressed urgently. GIUK in conjunction with the German British Forum and German British Chambers are planning a series of conferences in Britain and Germany to further these ideas.
Chief Economic Advisor GIUK
Member of the LSC Youth Committee 2004-2008
Much has been made in the past of America’s superior productivity levels – 20 per cent ahead of Germany’s and France’s, with Gordon Brown’s Britain seemingly catching up. But all may not be exactly as it seems.
The first mystery: how is a $700bn trade gap (6-7 per cent of GDP) reconcilable with the highest productivity in the world? As the manufacturing sector of the US, and for that matter the UK, has shrunk to somewhere just north of 15 per cent of GDP, the trade gap as a percentage of manufacturing output only is more than 40 per cent. When countries and companies are outperformed on world markets like that, the productivity story sounds less convincing. Strikingly, the trade gap is not just with the cheap labour countries of the Far East; it has been growing significantly with Europe, despite the dollar’s near 80 per cent devaluation against the euro.
Which brings me to the second part of the riddle. How are these productivity levels being calculated?