Bottom of the class for skills

SEVERAL years ago, I visited a brand new production line at the massive automotive parts factory in Coventry that once belonged to Dunlop.

In one of the less deserted factory buildings, car wheels were being pressed, welded and painted. When I arrived, the German-made machines were not running. A dozen workers were gathered in a cluster and several were hammering energetically at recalcitrant equipment.

While the factory might have been having a bad day, it was a depressing sight. Six months earlier, I had seen an almost identical line at Aschaffenburg in Germany. This was calmly being supervised by two German technicians surveying computer data. By comparison, the British seemed to be auditioning for the Keystone cops.

The stark contrast between the two factories remains in the mind as Britain faces another downturn. For decades, Britain has been beset by the misery of low levels of skill and training, low productivity, low wages and poor economic performance. Little has been done to improve the situation.

Britain suffers from higher volatility over the economic cycle than its competitors. In an upturn, skill shortages mean that interest rates have to be raised earlier than elsewhere to keep a lid on wage-rise-driven inflation. In a downturn, British employers are more ready to shed an underskilled workforce. This is surely a major factor why, despite North Sea oil, Britain has been outperformed by France and Germany since the 1970s.

It affects the entire culture. Vorsprung durch Technik is more than just an advertising slogan. Germans are obsessed with technological progress and their managers value innovation and high skills as the route to higher productivity and sales. By contrast, their British counterparts specialise in cutting costs.

The effect over successive cycles has been a gradual withdrawal from entire industrial sectors in Britain. The British car and computer industries are owned by foreigners. ICI, unlike BASF, is withdrawing from bulk chemicals. GEC has concentrated on defence electronics, while Siemens remains in the full range of businesses developed since the discovery of electricity. There has been the loss of industrial nerve due to a loss of know-how.

In an advanced industrial society, the human cost is high. While BMW prides itself in never having had to make a German worker redundant, its Rover subsidiary is now striving to cut 2,400 jobs. Bernd Pischetsrieder, BMW's chairman, has blamed Rover's underperformance on low prod- uctivity and lower skills. And Rover, as Mr Pischetsrieder has insisted, has taken vast strides forward in training, winning international prizes. Other British companies are far worse.

Last week, the Centre for Economic Performance at the LSE published a report confirming Mr Pischetsrieder's caveats and emphasising the need for drastic improvements to Britain's training programmes. Drawing on a large body of academic research, the report identifies vocational training as the key cause of Britain's low productivity. Apprenticeship: a strategy for growth by Hilary Steedman, Howard Gospel and Paul Ryan pleads for a strengthening of British vocational training.

The skills gap between Britain and Germany is massive. In 1996, around half of British 25- to 28-year-olds achieved an educational or vocational level equivalent to A-level or higher, compared with nearly 90 per cent of young Germans. The gap is largely due to the difference in vocational training; at university level, Britain is broadly competitive.

The report states: "The striking deficiency is in those qualified to the vital skilled craft, technician and junior professional levels."

After a number of false starts, the Conservatives intro- duced the Modern Appren- ticeship scheme in 1993. Modelled on the German scheme, the programme has yet to meet its own, very modest targets. Currently, some 75 per cent of 19-year-old Germans are engaged in an apprenticeship, compared with 10 per cent of their British counterparts.

Apprenticeship is at the heart of the German education system, giving 16-year-old school-leavers the professional skills and flexibility that will give them a high standard of living. It is open-ended, allowing young people to pass from vocational training to university education; many leading German businessmen started out as apprentices.

The system is strongly supported by the populace. Chancellor Helmut Kohl fought and won one election largely on the guarantee that all 16-year- old school-leavers would obtain an apprenticeship. It is also supported by German business; the scheme is entirely funded by companies and sustained throughout the economic cycle. Costs are checked by paying apprentices around a third of the skilled wage. This is possible, because firms are contracted to pay skilled workers higher and attractive wages.

Operated and supervised by the handelskammern (chambers of commerce), the German apprenticeship scheme offers a broad set of skills that are independently tested. The upshot is that Germany produces four times as many engineers as Britain, giving its vast engineering industry a skilled, flexible - and highly-paid - workforce. It also means that the figure of the "cowboy" plumber, electrician or builder is unknown in Germany.

Apprenticeship: a strategy for growth tacitly admits that the British scheme is currently a pale and miserable imitation of the German model. Numbers are low, several key business sectors such as chemicals and banking are poorly represented, standards are generally poor and not subject to independent scrutiny. Unlike Germany, there is no cadre of high-class trainers.

Colleges of further education have struggled to make sense of specialised vocational training, which is deemed too narrow "to provide the foundation needed to progress to higher education". Indeed, the report damningly states that the NVQ "gives little guarantee of standards". The skill requirements of current courses are "unambitious" by comparison with Germany.

British industry must bear part of the blame. The chairman of one of Britain's largest engineering companies once assured me he preferred to poach skilled workers rather than train them. In almost the same breath, he boasted that the German company he had just acquired had skills and products which far outstripped those of its British parent.

The virtue of enlightened self-interest is recognised in far too few British boardrooms. Training, like investment, is regarded with suspicion. There is little collegiality among competitors. Unlike the handelskammern, our chambers of commerce are wishy-washy institutions and lack the clout to establish and enforce standards. So the British taxpayer, unlike his German counterpart, will have to finance apprenticeship.

Amid the general gloom, there are positive moves. Attempts are being made to improve standards of the NVQs. Some industries such as tourism and electrical contracting already offer high-quality training. Leading firms such as Ford and Rover have broadened their courses to ensure that apprentices are multi-skilled and flexible. Like its German parent, Rover offers apprentices the opportunity to enter further education at its cost.

The authors of the report call for the number of apprenticeships to double within five years. This is both ambitious and not ambitious enough. The current situation is unworthy of a modern industrial society and, until it is improved, Britain's economic performance will continue to decline.

'Apprenticeship: a strategy for growth' is available from the Centre for Economic Performance, LSE, Houghton Street, London WC2A 2AE, price pounds 15.