Europe Looks To US for Tips On Training, Hiring, Firing, And Pay Scales

JOBLESS DILEMMA

THOUGH fractured by nagging political and monetary differences, the 12-nation European Union is remarkably in accord when it comes to identifying its most pressing problem: generating job opportunities for a society fast-approaching economic despair.

Registering 20-million-plus unemployed and a past decade of marginal job growth, European leaders expect that President Clinton's international jobs summit - scheduled for this March in Washington - will be a time for them to show their determination to reverse the decline.

They will also come seeking advice on a host of issues that United States public- and private-sector leaders are already engaged in, such as youth and urban unemployment, job training, flexibility in hiring and firing, hours and pay scales for workers, and beefing up small and mid-sized firms.

``Our diagnosis of our problems is largely complete [and] we are now looking for prescriptions,'' says Pascal Lamy, chief of the Cabinet of EU President Jacques Delors. Mr. Lamy was a principal architect of the EU White Paper on employment, which calls for ``changes in economic and social policies'' to combat deterioration in Europe's competitive position in employment, share of export markets, research and development, and establishing new products.

By all accounts, Europe's chief challenge is to reduce welfare costs that strangle job creation. Its economies are tangled in safety nets that were originally designed to ensure ``social fairness'' by providing a government-guaranteed network of health care, unemployment benefits, and social security benefits. But governments buckling under huge budget deficits and employers who pay high ``social costs'' on top of wages, no longer have the financial strength to afford these costs.

Zygmunt Tyszkiewicz, secretary general of UNICE, a confederation of Europe's largest employer unions, says he is worried about the ``delocalization of industry.'' Runaway ``social costs and minimum wage requirements,'' he says, are causing a migration of investment capital from Europe to countries like China, where labor costs are 0.5 percent of the costs in Germany.

But Mr. Tyszkiewicz says he is also irked by other government policies that impinge on job creation in the long run. ``Subsidies for ailing or uncompetitive industries should be removed and channeled into something new that regenerates economies,'' he says. ``Money going to prop up coal or wine growers could be used to encourage firms of the future, by funding education and research and development.''

France, where the unemployment rate is 12 percent (as in other European countries, unofficial figures put the jobless rate much higher), is riddled with European-style problems that hinder job creation.

In Paris, government officials groan about high social charges, worker-training programs that fail to bridge the education system's ``distance from actual demands of business,'' protectionist policies resulting in inefficient companies that cannot compete globally, and insufficient help for the small and medium-sized firms.

``Twelve percent presents two big immediate difficulties,'' says Andre Nutte, a senior official at the French labor ministry. ``One is the enormous problem of youth unemployment, which is upwards of 22 percent; the other problem is the people who have been searching for jobs for a long time.''

Mr. Nutte notes disturbing new trends such as the ``brutal turnaround'' for a growing number of white-collar workers who were intensely recruited just three years ago, but are now laid off and have poor prospects of reentering the work force. With the increase in underemployment or part-time work, Europe must also now grapple with the emergence of the working poor.

These developments are familiar to Americans, but they are magnified in Europe, where the troubles will likely deepen before they ease, and the prescriptions for combatting them are embryonic. Lamy says he hopes to gain insights from US policymakers who are ``much more developed'' in their strategies.

On joblessness, ``We don't know where the bottom is. We think we've reached it,'' says Francois Ecalle, director of forecasting at the French ministry of economy. France is still bucking EU advice on cutting subsidies for its national carrier, Air France, for example, and other costly measures to maintain the status quo. ``Policymakers are proceeding cautiously, lest they jeopardize economic growth,'' he says.

Keith Richardson, director general of the European Round Table of Industrialists, a group of large multinational firms, says his members demand a more proactive approach. He says wage levels, which must be negotiated between employees and employers, are already close to or may have even surpassed the limit of what European economies can manage. But government can cut back on the nonwage costs, such as employer taxes and social security costs that exacerbate unemployment. ``In effect, Europe has imposed a tax on jobs,'' he says.

``Can Europe afford to employ workers with current benefits and expect higher productivity?'' Mr. Richardson asks. Big firms, he says, will grow by stepping up productivity, which means halting the increases in wages that are pricing European labor out of global competition.

Like the US, the large and often atrophying corporations dominate the industrial sector. But the service sector, where growth far outstrips industry, is the spawning ground for the smaller firms. Entrepreneurs call for government support - through tax relief and other incentives - to develop their businesses and hire new workers.