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WZB Berlin Social Science Center

WZB Berlin Social Science Center. Ulrich Jürgens The German Case Labour Institutions as a Countervailing Power?. Conference on Financial Institutions for Innovation and Development Ford Foundation, Hans- Böckler Foundation, SOFI 10-11 November 2014, Berlin.

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WZB Berlin Social Science Center

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  1. WZB Berlin Social Science Center Ulrich Jürgens The German Case Labour Institutionsas a Countervailing Power? Conference on Financial Institutions for Innovation and Development Ford Foundation, Hans-Böckler Foundation, SOFI 10-11 November 2014, Berlin

  2. CharacteristicsofGerman Corporate Governance & Innovation Systems Corporate Governance Innovation System R&D intensive Industry (medium-high tech) dominated Incrementalratherthandisruptive • Weakcapitalmarketexposure; patientcapital • Technical orientationofbusinessleaders • Strategic roleofbanksandsupervisoryboards • Co-determination oflabour What Impact hasFinancialization?

  3. R&D Intensityhasbeenincreasing R&D Expenditure in % of GDP R&D Personnel (full-time equivalent) per 1,000 Dependent Labor Force (in %) from 1995 to 2012 Germany Private Sector: 61.2% Public Sector: 28.8% Schasse, U. et al.. (2014): Forschungs- und Entwicklungsaktivitäten der deutschen Wirtschaft: Studien zum deutschen Innovationssystem Nr. 2-2014, NIW, DIW, SDW, Hannover: p. 17 and58.

  4. The Classical Profile ofSectoral Distribution hasbeenmaintained Focus of R&D in Germany vis a vis OECD Countries, 2011 Relative shareoftheeconomicsector in R&D expendituresofthe total economy Services DV-Equipment, Opto-electronicalProducts Pharmaceuticals Automotive Engineering Other Industries Air and Space Vehicles Mechanical Engineering Chemicals *OECD-24: GER, FRA, GBR, ITA, BEL, NED, DEN, IRL, ESP, POR, SWE, FIN, AUT, POL, HUN, CZE, SVK, SLO, NOR, TUR, USA, JPN, KOR, AUS. Electrical Engineering Other EconomicBranches Other Vehicles Schasse, U. et al.. (2014): p. 42.

  5. Access toFinanceis not a criticalIssue ImportanceofHindrancesfortheAchievementofBusiness Goals ofCompanies in Germany, 2010-12Relative Share of all Companies Irrelevant High Medium Low Strong Price Competition Strong Competition on ProductQuality and Marketing Lack of Demand Innovation donebyCompetitors Market DominanceofCompetitor Lack ofspecializedPersonnel Lack ofsuitableSourcesofFinance High Entry CoststonewMarkets High Costsof State Regulation Aschhoff, B. et al. (2013): Dokumentation zur Innovationserhebung 2013, Dokumentation Nr. 14-01, ZEW, Mannheim und Karlsruhe: p. 107.

  6. Growth Dynamics arethestrongest in theupperMidmarket Sales Growth 2006-2012 accordingtoTurnoverClasses in % Turnover Volume in Mio. € Creditreform and IKB (2014): Wachstum finanzieren. Eine Analyse der sich wandelnden Finanzierungsmuster im deutschen Mittelstand, Düsseldorf: p. 8. (https://www.ikb.de/MediaLibrary/139648e7-34ab-43ad-a010-fbe04033d1b7/140818_IKB_Studie_Finanzierungsmuster%20im%20Mittelstand.pdf, 05.11.2014)

  7. Banks lose in Importanceand Pension Funds still play a minor Role Credit Volume and GDP on a quarterly Basis in Germany (Index firstQuarter 2000 = 100) Investments of Pension Funds in % of GDP, 2012 Creditsto Companies andSelf-employed GDP (nominal) Switzerland United Kingdom Australia USA Canada Japan Spain Germany Italy Creditreform and IKB (2014): p. 23 and 27.

  8. Internal Financinghasbeenincreasing Volume of Internal andExternalFinancing in Bill. € ExternalFinancing Internal Financing Creditreform and IKB (2014): p. 29.

  9. Labour Institutions as Drivers of Innovation Example One:The IG-Metall Campaign „BetterinsteadofCheaper“ • Promotion ofbetterworkingconditions, aswellas high productqualityand innovative processesandproducts • Focus on developingargumentsandideasforsustainableeconomicactivitieswithinthecompany • Major approaches • Strategyworkshopsandfutureworkshops • Analysis ofinnovationabilitiesandcapacities • Advice on establishing an earlywarningsystemwithregardtoneglectinginnovations • Analysesconcerning material consumptionandtheefficiencyoftheuseofenergyandressources • Employeesuggestionsystem • Assessment ofnewtechnologiesandproductinnovations IG Metall (2014): Besser statt billiger: Innovationen mit Mehrwert für sichere und gute Arbeit, Düsseldorf.

  10. Labour Institutions as Drivers of Innovation - continued ExampleTwo: Involvement oftheNational IG Metall in theSteeringCommiteeoftheIndustry 4.0 Programme Kurz, C. (2013): Potenzial, Auswirkungen und Gestaltungsbedarf aus Sicht der IG Metall, Presentation at TU Berlin: p. 24.

  11. ExampleThree: Involvement ofthe regional IG Metall in theActivitiesoftheGovernment Programme „National PlatformforElectromobility“ Labour Institutions as Drivers of Innovation - continued National PlanElectromobility National PlatformElectromobility 4 Showcase Projects amongstothers Bayern/Sachsen IG Metall leadsAG 3 Qualification Future Workforce Future and Need oriented Educational Planningand Education offutureEmployees in academicandtechnicalOccupations ExistingWorkforce Further Training and Education oftheexistingWorkforcefornewlyrequiredCompetencies -Fornew Products, ProceduresandProcesses -Upskilling (i.e. 1000V andAutomatization) Training andfurther Education Works Councilsof Audi, BMW, ZF + Regional IG MetalldevelopQualification Modules forElectromobility Duration 2013-2017 Challenge: The Coexistenceofcurrentandnew Fields ofActivitiesandtheassociated double CompetencyRequirements Meißner, H.-R. (2014)

  12. Labour Institutions as Drivers of Innovation - continued ExampleFour: Labour‘s Innovation Funds at Volkswagen Collective Labor Agreement „Zukunfts-Tarifvertrag“ 2006/2009 IG Metall & Volkswagen AG Forrisky Projects at an early Stage The Project must have a positive Impact on the Site concernedandshouldcontributeto Job Security • DegreeofInnovation (Idea, TechniqueorProject must constitute a genuine Innovation) • ProspectofProfitability • SecuringEmployment • Implementability at oneofthedomesticSites Project FundingCriteria VW (2014): Business Information, Wolfsburg.

  13. Innovation Fund II: New Fields ofActivities Alternative Drive Conceptsand Components Sustainable Mobility Raw Material andEnergy Efficiency New Vehicle Design Conceptsand Components SustainableEnergyProduction Autonomousand Mobil Assistants HealthandErgonomics MachineryandPlant Engineering VW (2014): Business Information, Wolfsburg.

  14. Conclusion • Labour Institutionscanfunctionascountervailing Power toCapital Market Pressure • Theycan also be a Driver ofInnovation on different Levels (Company, Regional/Sectoral, Economy)

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