The TUC report, “Shifting to the High Road”, published yesterday, is a response to a major study for the Department of Trade and Industry (DTI) by a lauded US academic earlier this year. The May 2003 DTI study, “UK Competitiveness: Moving to the Next Stage” by Professor Michael Porter of the Harvard Business School was widely debated at the time by economists and Whitehall advisers.
The report by the TUC heralds the fact that a DTI study by an independent US academic actually echoes two main campaigning issues for British trade unions: deregulated British industry, and companies that seek to compete by using cheap labour and under-investing in skills.
In particular, the TUC report says the DTI study “flatly contradicts” the ‘red tape’ campaigns of the UK’s business lobby. It quotes from the study saying that far from being over-regulated and over-taxed, British businesses benefit from the “lowest level of product and labour market regulations” among leading industrial countries.
Elsewhere, the TUC agrees with the Harvard academic’s conclusions that British industry places too much emphasis on cutting costs and lowering wages in order to stay competitive. The TUC report says: “British businesses are, for the most part, stuck in a “low road” rut – competing on price not innovation, and characterised by low investment in physical and human capital.”
Brendan Barber, TUC General Secretary, summed up the report saying: “The UK cannot compete for much longer with a strategy of building cheap things cheaper. The government are going to have to get on with the job while business remains pre-occupied with whinging about imaginary ‘red-tape’.”
The report by the TUC comes less than a month before its main annual conference in Brighton on 8-11 September 2003. Commentators are predicting a stormy conference with the new generation of “awkward squad” trade union leaders expected to use the conference to criticise the government’s industrial policies and changes to the public sector.
Although UK competitiveness and the government’s industrial policy has remained a key concern for the TUC, the implications of economic competition between countries has been questioned in recent years by campaigners on the left concerned with the nature of globalisation and neo-liberal economic policies. Some critics believe increased economic globalisation has caused a “race-to-the-bottom” in labour rights and taxation levels as western countries attempt to minimise the costs of engaging in business within their borders.
One NGO, the International Simultaneous Policy Organisation, is entirely focussed on promoting uniform minimum social and labour standards among competing nations. Its Director, John Bunzl, has said: “The principal barrier to implementation of any significant measure to improve today’s environmental, economic or social problems is destructive competition. Global de-regulated capital flows and corporations know no national boundaries and by their ability or threat to move elsewhere, force nations to compete with one another for capital, jobs and ever-scarcer natural resources.
“Policies that seek to address environmental or social problems requiring higher public spending or higher costs for industry are precluded on the grounds of uncompetitiveness, adverse market reaction and the threat of job losses.”
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