WMCA Industrial Strategy Consultation

Priorities

Promote sectoral initiatives that bring employers, unions and political leaders together to support productivity improvements and better jobs in key sectors.

Support development of high skill, high productivity jobs, through (a) supporting strategic industries in the region and (b) supporting new sectors, including low-carbon technologies.

Drive up productivity, pay and conditions in the low paid sectors and support great jobs in the ‘foundational economy’

Key issues and evidence 

Sectoral approaches need to focus on two key challenges:

• Expanding the supply of high skill, high value jobs
• Improving productivity, pay and conditions in those sectors where there is furthest to catch up.

Increasing the supply of high skill, high value jobs

The TUC represents Trade Unions across our world leading sectors, including the automotive industry, life sciences, financial services, and the creative industries. We want to see these sectors thrive and grow, offering more good jobs with decent terms and conditions. The draft industrial strategy could do more to emphasise the world class products delivered by manufacturers across the WMCA.

In 2017, the TUC Midlands published a ‘Cultural manifesto’ outlining how the WMCA can deliver for the cultural sector in the WMCA region. Decision makers at the WMCA should work with unions working in the creative industries to look at implementing the recommendations contained within the plan.

Strategic employers in the region have a key role to play in supporting productivity and growth, providing high paying employment in sectors that promote significant GVA in the local economy. They also have a leading role to play both as a direct employer of large numbers of local people and through their extended supply chains.

The WMCA, other local political leaders and LEPs should work with strategic employers to ensure that investment and purchasing decisions have a positive impact on jobs and supply chains across the region. And that strategic companies are supported to ensure that they are able to benefit from largescale government procurement and infrastructure projects.

The WMCA and LEPs should establish boards based around key priority growth sectors identified in the local industrial strategy that could bring social partners together to look at opportunities for growth, resilience of the sector and the key employers within it, local labour supply, development of robust supply chains in the local economy, education and training that enables local people to access the skills required for key sectors, provision of workforce development and training, pay and conditions and career progression.

The Grand Challenges set out in the national industrial strategy present opportunities for innovation and the development of a new economy, but this also comes with risk. The WMCA industrial strategy should set out what measures the WMCA and others can take to de-risk the transition to a new economy. For example, this might take the form of providing match funding that underpins or levers in research and development and supports knowledge transfer. But it could also mean different approaches to commissioning services or local planning, providing longer term and more sustainable contracts to social providers that enables them to innovate and invest in the workforce, or the protection or provision of appropriate commercial and industrial spaces. All these measures should consider how to derisk the position of those workers employed in these sectors.

While we cannot predict the future, we should be able to identify new opportunities in some growth sectors. Green technology is an obvious example. The local industrial strategy must develop a robust green energy and industrial policy.

In 2016, the TUC published Powering Ahead: how the UK can learn from Europe’s environmental leaders. This report, based on original research from Germany and Denmark, challenged the argument that environmental protection was a luxury that could only be afforded in good times; on the contrary, the Stern Report, which predicted a market of $500bn in environmental goods and services by 2050, showed the economic opportunities, as well as the threats, from climate change.

A green industrial strategy in the region should look at how industries can meet the opportunities and challenges posed by a long-term plan for greening the economy, including a target of 50 per cent renewable energy target by 2030.

This should include:

• identifying the new industries that could be developed
• the changes and new technology that existing industries would need to implement
• supporting the research and development capacity that exists in the region
• facilitating knowledge transfer and the delivery of new technologies to market
•  equipping workers with the skills and capacity to cope with these changes, through coordination with Skills Advisory Panels and the National Retraining Partnership.
• bringing all partners together, including unions, to jointly own and promote the green industrial strategy, ensuring an inclusive and collective response.

Improving productivity, pay and conditions in those sectors where there is furthest to catch up

Expanding jobs in high paid, high productivity sectors is an essential part of the drive for more decent jobs. But to deliver better jobs across the country, we need to improve the quality of work in low productivity and low paying industries. The problem of the rise of insecure work across the region is a major problem and deserves greater recognition within the industrial strategy.

We believe that a local industrial strategy should have a strong focus on supporting and promoting great jobs in the foundational economy. The foundational economy includes those parts of our everyday services that often overlooked in policy terms but are the foundation of all our communities – from ‘material’ services such as gas, electricity, telecoms, retail banking and food processing, distribution and retail through to ‘providential’ services such as health, social care and education.

These sectors of the economy are rooted in our communities, employ large numbers of local people and are largely sheltered from international competition, off-shoring and, in some respects, automation. They are also sectors where the state has significant leverage through commissioning, procurement, planning and regulation. They are also likely to continue to face rising demand. All factors that lend themselves to key components of sustainable and inclusive growth in all our communities.

It is estimated up to 40 per cent of the workforce is employed in these parts of the economy, broadly defined. However, too many of the jobs created within these sectors are insecure, low paid, low skilled and offer little in terms of progression. There is no reason why these sectors cannot create great jobs.

More than a third of all employee jobs nationally, around 9.6 million, are in the low pay sectors. The Low Pay Commission’s research has also demonstrated that in recent years the rate of jobs growth in low paying industries has outstripped the rise of employment in the rest of the economy. Sectors with a high incidence of low pay include: agriculture; food processing; textiles; retail; hospitality; cleaning; social care; child care: leisure: hairdressing: and transport and storage.

Research by the IPPR has demonstrated that it is in these industries that the productivity gaps that the UK experiences with the rest of Europe are largest. They estimate that “if we were able to raise productivity levels among low-wage firms to the levels seen elsewhere, the UK could close a third of its average productivity gap with Belgium, France, Germany and the Netherlands”.

These industries are also some of those seeing the fastest rises in insecure work. Since 2011, the industries in which insecure jobs (including low paid self-employment, agency work and zero hours contracts) have risen fastest, are hospitality and social care. When workers do not know the hours they are set to work from one week to the next, are frequently denied sick pay, and miss out on family friendly rights, it is easier to understand why productivity levels in these sectors are often so low. A goal of the WMCA should be to end the use of ZHCs across the region, instead promoting the principles contained within the TUCs ‘Great Jobs Agenda’

The draft WMCA strategy refers to “high employment, with more good jobs and accessible opportunities, and diverse leadership in business and public life”. This aim is welcome, but it is disappointing the consultation document makes no direct reference to the retail sector. Retail in the West Midlands generates 7% of total UK Retail GVA and 5% of total region GVA. Nationally the retail sector employs 2.98 million people, and this rises to 4.6 million when wholesale trade and motor vehicle trade and repair are included, making it the largest industrial sector in Great Britain. It contributes 11% to the UK economic output and is also fundamentally connected with other key sectors including distribution and food manufacturing.

While some of the challenges facing retail are national or sectorial issues, from a regional perspective more can be done to support the sector. For example, according to the Centre for Retail Research, store vacancies in the West Midlands stood at almost 15% in 2017. The retail union Usdaw welcomes the proposals from WMCA to revitalise town centres across Birmingham and the Black Country. Whilst recognising the future of the high street will not only be about shops, considering the size of the sector, any industrial strategy for the region must incorporate traditional sectors like retail and not just focus on the more innovative and technical sectors.

At a local level an industrial strategy for the region should include the following measures to help the retail sector:

•  A comprehensive review of rents within the sector and other initiatives, including the proposal to establish a register of landlords of empty shops in each local authority.
•  A review of town/city centre parking charges and other transport issues. For example, free bus travel for under 25’s.
•  Other initiatives to improve town centre footfall. This needs to involve a range of measures from tackling the issue of anti-social behaviour in town centres, as well as pursuing more creative measures to attract shoppers.
•  A commitment from employers and local government to invest in skills within the retail sector, including sustained investment in skills for workers affected by automation, including through union learning and high-quality apprenticeships. According to the Centre for Cities, workers in the Midlands are amongst those who are most at risk of losing their jobs to automation/robots.
• A new model for co-operation around tackling retail crime, particularly in light of automation, e.g. self- service tills and the lack of investment in stores which has, in some cases, resulted in severe understaffing. We are also concerned about the rising level in knife crimes. As highlighted in Usdaw’s Freedom from Fear campaign, in recent years we have seen rising levels of retail crime and abuse. The Freedom From Fear campaign seeks to bring together employers, the police and local authorities to tackle the scourge of violence, threats and abuse against public-facing workers.

Raising productivity, pay and conditions in these industries must therefore be a key part of the WMCA’s industrial strategy in order to deliver for all citizens across the WMCA footprint. In the 22 West Midlands, there has been a 66% increase in the number of children living in poverty with a working parent since 2010.

And the current context is one where the need for a strategy for the low paid industries is becoming sharper:

• The government has rightly set out its ambition to ensure decent working standards for everyone, and is investigating how to do this through the Taylor review
• The expansion in coverage of the National Living Wage means that businesses dominated by low pay are already looking for ways to increase their productivity
• Many of these industries are at present reliant in large part on EU migrants, who make up over a quarter of the workforce in food manufacturing, hotels, and the domestic personnel sector. If immigration policy tightens, or EU citizens no longer find the UK an attractive place to live, these businesses may need to think of new approaches to recruiting and retaining staff, in an already tight jobs market.

It is certain that the low paid industries cannot deal with these issues on their own. Rather, government would need to take a tripartite approach in bringing together employers with working people and their trade unions in order to move forward.

The local industrial strategy should convene meetings of employers, commissioners and purchasers of services (where appropriate), unions and other key stakeholders to develop joint approaches to boosting productivity, creating great jobs and managing structural and technological change on a sector by sector basis, including a focus on ‘foundational sectors’, e.g. social care.

This could lead to the creation of sector-specific bodies in the region, charged with increasing pay, efficiency and general business success in each of the low paid industries. Our vision is for a new model, drawing some lessons from a number of bodies, including the industry-based Economic Development Committees of the National Economic Development Council, less formal initiatives like PILOT in the oil and gas industry, the Low Pay Commission, and the agricultural wage setting bodies of Scotland, Wales and Northern Ireland.

A short-coming of past initiatives is that none of them combined a vision of business success with a strategy to improve wage-setting and create better jobs. Yet improving pay and conditions is a necessary condition for raising productivity in these sectors, since low wages are often associated with low quality work, low skills, poor staff motivation, high turnover and negative labour sorting by ability.

The draft industrial strategy makes reference to a housing plan which is welcome. However, more specific detail is regarding the areas of need (i.e. low cost, affordable and social housing) is needed. The WMCA could learn from work being done through Nuneaton and Bedworth Council regarding the use of modular builds that could be developed across the region.

Recommendations

Develop new sectoral boards, bringing the WMCA and LEPs together with employers, unions and other stakeholders to support productivity improvements and better jobs across key 23 industries. Looking at opportunities for growth, resilience of the sector and the key employers within it, local labour supply, development of robust supply chains in the local economy, education and training that enables local people to access the skills required for key sectors, provision of workforce development and training, pay and conditions and career progression.

There is clear potential to support the development of more high skill, high productivity jobs by expanding the UK’s role in low-carbon technologies. The local industrial strategy should aim for 50 per cent of energy to come from renewables by 2030 and should map potential for new technologies, areas of growth and coordinate support for workers and investment around a long-term plan for a just transition to a low-carbon economy.

The industrial strategy must include an approach to driving up productivity, pay and conditions in the low paid sectors, including retail. The TUC believes that sectoral approaches will be essential here, with new bodies that bring business, unions and the WMCA together to improve training, progression and productivity.