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Jobs: Europe's No. 1 concern

Outside, in pouring rain, thousands of jobless workers march up to gray barricades, holding up red, blue, and black trade union flags, demanding that their governments create more jobs.

Inside, West European leaders sitting around a summit table disagree on how best to do it.

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And looking on with intense interest: the United States. The Reagan administration has a large stake in the strategies European leaders adopt.

Prolonged recession here has helped fuel opposition to defense spending in Belgium, the Netherlands, West Germany, Denmark, and Norway, and has led to shifts and cuts in Britain.

A genuine European economic recovery -- not yet in sight, economists gloomily conclude -- would mean more money available for NATO defense plans against the Soviet Union.

Five of the leaders will tackle the issues anew with US and Canadian leaders in the coming Ottawa summit.

Around the table, some leaders (British, West German, Italian) argued that the priority task was to fight inflation and cut public spending.

Others, however (the new Socialist President of France, Francois Mitterrand, supported by Denmark, Belgium, and Ireland), said no, the best way was to boost government spending, specially to create jobs, promote energy conservation, and improve working conditions.

"The difference in emphasis was certainly visible," commented one participant privately afterward. "Nor was it just socialist governments favoring public spending and nonsocialist governments not."

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West Germany's moderate socialist chancellor, Helmut Schmidt, joined Conservative British Prime Minister Margaret Thatcher in arguing that controlling inflation should come first, with better control of balance-of-payments deficits. Ireland, definitely nonsocialist, tends to favor greater government spending to create and preserve jobs.

Some diplomats here were not surprised that leaders both disagreed and stuck with existing formulas: "It would be odd if the leaders were suddenly to pluck new solutions out of the air," one said.

Others felt that such creative plucking was exactly what Europe's growing army of unemployed was hoping for.

According to a report by the European Commission to the summit, the average unemployment rate among the 10 member states was 7 percent this year, up from 5. 5 percent in 1979.

The rate was highest in Belgium (11 percent), Britain (10.5) and Ireland (9.7 , though other reports put the figure well over 10 percent). France was reported at 7.7 percent, and West Germany at 4.6. The average figure would be higher if tiny Luxembourg (1.1) was excluded.

The report said unemployment was "still rising sharply" and held out little hope of an early fall. It criticized Belgium, Italy, Denmark, and Ireland for excessive spending and high deficits.

To jobless demonstrators in the rain outside the Batiment Tour (Tower Building) on the Kirchberg Heights here, the issue was grimly practical: "Work for all," said the signs snapping in a gusty wind.

Leaders around the table inside felt the pressure but responded in terms of their own national problems and convictions.

Mrs. Thatcher reiterated her strong belief that inflation is the major long-term enemy, destroying the ultimate basis on which priate industry can revive and thus create more jobs. She is criticized in Britain for failing to cut public spending enough, on the one hand, or for cutting it too much, on the other.

At a press conference June 30, Mrs. Tatcher stressed that each country had to handle its economic problems in its own way. Countries like France, whose budget deficit was a small percentage of its gross domestic product, had more freedom to boost its public spending than countries like Britain, whose budget deficit was proportionately higher.

France, she said, had covered its expenditure by heavy taxation -- 7 percent value- added tax on food, and 17.5 percent on other items. Britain did not believe in putting value- added tax on food and wanted to keep its overall VAT at 15 percent.

Chancellor Schmidt stressed the need to control spending as well. Neither he nor Mrs. Tatcher supported other leaders' criticisms of high US interest rates, which have forced up rates here and increased inflation.

President Mitterrand, in his first speech to a European summit, urged the European Community to provide loans to industries already performing well, such as the computers and energy industries. He supported better conditions for workers, a shorter working week (35 hours), and more research.

Italy's new government stressed the need to bring down inflation (about 20 percent in Italy). The danes argued for more government spending, or "reflation."

Diplomats who oppose "reflation" argued that spending was no real policy in itself. A shorter workweek would merely drive up overtime and other costs without lifting productivity.

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