G-7 Jobs Meeting Highlights World's Contrasting Labor Markets

It's a global recession, but countries have very different jobless rates

AT a recent Seattle conference, Jerome Meyer pledged to potential investors that the company he heads, Tektronix Inc., was making a broad effort to boost profits. Steps have included a 13 percent staff reduction, hiring outside contractors to handle some tasks, and focusing only on the most promising markets.

If this maker of computer graphics, television, and test equipment were based in Japan instead of Wilsonville, Ore., the downsizing likely would have been avoided or delayed because of managers' desire to ensure lifetime employment.

The contrasting labor markets - flexible and volatile versus paternalistic - were on display this week as the Group of Seven major industrial democracies met in Detroit to discuss how to retain and add high-wage jobs. Japan, though economically troubled, has managed to keep its official jobless rate around 2.5 percent, versus 6.5 percent in the US and higher in Canada and Europe.

In the shareholder-driven realm of American business, the experience of Tektronix is par for the course. January's 109,000 layoff announcements were the most in four years of tracking, according to the Chicago outplacement firm Challenger, Gray & Christmas.

While no one expects the US to abandon its system, Japan's apparent track record of success raises the question: Should the US try to shift more toward an employee-centered, rather than investor-centered, workplace?

Employee ownership

US Labor Secretary Robert Reich has hinted at this, suggesting that struggling firms consider employee ownership rather than layoffs. He argues that Wall Street's positive response to layoff announcements has little basis in company track records.

One study that backs up Mr. Reich was done by the Wyatt Company, a benefits consulting firm based in Wellesley, Mass. Barely half of the companies that wanted to boost profits and productivity through ``restructuring'' did so, a 1993 survey of top executives found. Among the survey's results:

* Only one in five companies reduced inefficiencies. Thus, while the payroll dropped, wasteful practices remained. By contrast, successful restructurings typically sought to transform company culture, not just lay off workers. Executives said various employee-involvement programs were among the most effective aids to restructuring.

* Most of the companies that downsized wound up restoring some of the jobs. Still, just one company in 10 revived more than 10 percent of the cut positions, far fewer companies than in a Wyatt survey of 1980s downsizings.

* Restructurings hurt morale and loyalty, and caused work loads to rise among remaining workers at most companies.

Referring to this last phenomenon, Chicago outplacement consultant John Challenger says he sees a ``significant change in the social contract between organizations and the individual.''

But if jobs are less secure than ever in the US, America's business climate also has strengths, notes Gary Burtless, a Brookings Institution labor economist.

Opportunity to leave

Unlike Japanese workers, Americans ``can leave our employers, with very little notice, and no one holds it against us,'' Mr. Burtless says. This flexibility helps talented workers get higher wages, as companies give bonuses to keep them from jumping ship.

And despite the continuing layoffs, he says, ``The number of people employed ... has been going up.'' The US posted a net gain of about 2 million jobs over the last year.

With companies free to shed unneeded workers, the flexible job market promises to benefit the economy as a whole by boosting productivity, Burtless adds. That has happened at Tektronix, where sales per worker are up 8 percent from last year.

If restructuring leads to higher profits and output, companies can target these gains into new job-creating ventures. Tektronix may not be adding jobs yet, but it relies increasingly on new products. Products less than two years old account for half its revenues, up from 22 percent in 1991.

Yet the historical trend of productivity is disturbing, with US output growing slower than that of other industrial nations. Mr. Challenger says ``the jury is still out'' on how successful current downsizings will be, since positive results may show up a few years after the initial chaos of restructuring.

Burtless also notes that America's system is hard on those who do lose jobs, especially in long-term industry-wide changes. President Clinton is pushing a ``Reemployment Act of 1994'' to help such people with training, but without any guarantee that they will find new jobs.

When Japanese companies face tough times, they often go through this process internally: reassigning workers to new parts of a diversified company or training them so they will be more productive when they are needed again.

``The suffering tends to be much more evenly distributed throughout the work force'' rather than centered among the unemployed, Burtless says.