German lessons

German lessons

The 3 per cent cut to the EU budget at last week's marathon summit amounts to a tiny proportion of public spending throughout the European Union, less than one per cent. The Prime Minister is claiming victory, even though the UK will be paying more to the EU as the 'UK rebate' is reducing.

The budget must still be ratified by the European Parliament and here there may be a different focus. Cameron and allies in Holland, Sweden and Germany have concentrated entirely on EU administration, mirroring the Tories' approach to the economic challenges in the UK, sticking fast the view that you can cut your way out of recession. Southern European states are concerned about the impact that an 'austerity budget' will have on the EU's potential to support and promote growth and this view is more strongly felt in the Parliament than in the Council of Ministers. No doubt MEPs will express these concerns in due course, though it is unlikely that the opposition to the budget will be strong enough to upset the apparent compromise.

This debate represents some fundamental economic policy differences at play right across Europe as well as here in the UK, even within the alliance formed to force through the budget amendments last week - the difference between targeting fiscal or employment outcomes.

Unemployment across the EU stands at an average of 11.7 per cent, in Spain it is close to 50 per cent, in Germany it is edging up towards 7 per cent. In the north east the employment rate stands at 64 per cent, woefully low. While building alliances to squeeze relatively minor concessions out of the 973bn euro budget goes down well with the Tory backbenchers and provides a popular headline, the real focus should be how the UK can learn from those countries that have managed to withstand the economic downturn much better than the UK.

In Germany jobs and quality of employment matter as much as profit and finance. In the UK, unemployment is famously a 'price worth paying' for contestable fiscal goals.

In German industries and businesses the workforce are embraced and involved as a trusted, valued and important part of the solution - that trust resulting in an open trade off between flexibility and extra commitment for job security and continued investment in training. In the UK trade unions are castigated as opponents to business success, despite plenty of evidence that the best performing workplaces are the ones that have the most active partnership arrangements.

Germany has continued to invest heavily in training and R&D, while the UK readily gives up its technological advantages and systemic underinvestment in training for generations has led to a plethora of skills shortages at a time of high unemployment.

Perhaps the Prime Minister should forget the European grandstanding and take a good look at where our EU partners are making much better progress than the UK and think about adopting a more European approach.

Kevin Rowan

Regional Secretary

Northern TUC