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Need a Job? Rich Nations Can't Afford to Help You

FRANCE'S recent public transit strike not only put Paris in gridlock. It also put industrialized nations on notice that their drive to cut bloated budgets and find new ways to create jobs is in a jam.

Voters in most Western nations have failed to see a payoff in their paychecks from efforts to shed chronic unemployment. In many countries, more than 1 in 10 don't even earn a paycheck.

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The challenge is as daunting as during the Great Depression. Many veterans of the war against stagnant economies are not sure they can win.

"It's our dirty little secret," said an official at the Organization for Economic Cooperation and Development (OECD), a Paris-based "club" of 25 rich nations. "Automation is destroying jobs faster than we can ever create new ones."

German Chancellor Helmut Kohl threw down a gauntlet to the citizens of Europe's strongest economy this fall, saying Germans are getting "too comfortable to compete."

"There are debates going on in Germany that were impossible six months ago," Hans-Olaf Henkel, president of the Federation of German Industries said recently. These include an end to early shop-closing hours and cuts in social programs, which now tie up one-third of the nation's gross national product.

Driving this shift in public attitudes is the fact that German companies are now putting plants anywhere but in Germany. "We're unable to create the jobs we need to create," he added.

Several high-profile German companies recently announced significant downsizing, including Daimler-Benz Aerospace, which plans to cut 8,000 jobs and sell at least three production plants.

In 1994, 35 million workers in industrialized countries were out of work, representing the "worst employment crisis since the Great Depression of the 1930s," said the Geneva-based International Labour Office.

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The most recent wave of unemployment has fallen most heavily on young people and less skilled workers. In many European countries, more than 40 percent of the unemployed have been jobless for at least one year. By the end of 1996, unemployment in industrialized nations is likely to remain well in excess of 30 million people, according to the OECD.

The prospect of high and persistent unemployment is a political time bomb for European governments.

"The confidence of citizens in their leaders is undermined so long as unemployment and [job-market] exclusion are not checked," French President Jacques Chirac said after his election in May. "To meet this challenge is for us an absolute priority."

Even in Japan, which has had the lowest official unemployment in the industrialized world, last month's jump to 3.4 percent from 3.2 percent marks the highest level of joblessness since 1953. "Now many young college graduates can't find jobs," says Moriyuki Motono, adviser to Nomura Securities Co. Ltd.

Throughout much of the postwar period, governments aimed to spend their way to full employment. In the 1960s, France set about to create "national champions" to meet the challenge from American industry. In the early 1980s, United States policymakers pledged to "reindustrialize" America.

During the Reagan and Thatcher years, the emphasis shifted to deregulation and incentives for small businesses to grow. National and local governments throughout the US and Europe launched hundreds of programs to create mini-Silicon valleys, which would, it was argued, incubate new businesses and create jobs.

In the quest for jobs, the United States holds a decided edge over its European partners. Since 1980, the US has added some 24 million jobs to its economy, while the EU, more populous than the US by about 40 percent, has created only about 9 million. Economists blame Europe's generous welfare systems and high wages for its relatively sluggish job growth.

But observers disagree whether European governments should follow the American model.

"The United States has an admirable level of unemployment, but Europe doesn't envy its level of poverty," said French labor leader Nicole Notat. "People may have more jobs, but many live precarious lives, with temporary, low-paying jobs."

In France, spending on job creation tripled in real terms between 1989 and 1993. President Chirac campaigned on the need to solve the nation's unemployment problem. But double-digit unemployment has persisted and now stands at 11.5 percent.

Advisers proposed a variety of new job creation schemes, but in October, Chirac opted instead to cut the government's $64 billion deficit and warned voters to expect two more years of austerity.

His conservative government's bid to cut social benefits last month sparked nationwide strikes that shut down public transport for three weeks and sent 1 million people into the streets in protest.

"We have a certain culture we don't share with Anglo-Saxons that can't be wiped out with a pencil," French Industry Minister Franck Borotra said during the strike. "Our people have a very different view of the state and the place of the state in society. Here public service is viewed as the key to social cohesion."

The intensity of public protest in France alarmed European conservatives, who feared the protest might dampen France's resolve to create a single European currency by 1999.

Austria held snap elections Dec. 17 after a government dispute over how to cut its $12.5 billion budget deficit. Conservative leader Wolfgang Schussel had called for an overhaul of the nation's social security system but lost his bid to take control of the government's coalition. The French strikes, he said, "didn't help us."

The OECD urges member states to increase public efforts to help the unemployed get back to work. OECD governments now spend on average 1 percent of their gross domestic products on creating jobs.

But governments are training people for jobs that may not exist and are setting themselves up for deeper political problems, experts say. "The drive to automation is relentless and unstoppable: It creates some highly paid jobs, but not very many of them," says Frank Coffield, who studies national job-training strategies at Britain's University of Durham.

"In Britain, we've put all of our effort into education," he adds. "Suppose we ... develop world-class skills among our young people, but they don't get a chance to use them. Sixteen percent of our postgraduates aren't finding jobs.... Young people on the street are already causing real trouble. The disappointment is going to create major political problems."

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