Warning Signs for the Jobs Summit

July 26, 1993

President Clinton's "jobs summit" -- a Camp David gathering this fall of finance and labor ministers from the Group of Seven advanced industrial countries -- may provide some awkward moments for administration advocates of higher minimum wages, open-ended extension of jobless benefits and increased payroll taxes to pay for health care.

All increase the cost of labor and discourage new hiring. On a scale much higher than that found in the United States, they have long been a feature of the European labor scene. Now the 24-nation Organization for Economic Cooperation and Development has come out with a report linking Europe's double-digit unemployment rates with similar policies on the Clinton social agenda.

The OECD said long-term unemployment, which has reached plague proportions in Europe, is an outgrowth of rigid labor laws that discourage job creation and of generous unemployment benefits that gave the jobless scant incentive to look for work. Job growth in Europe, primarily in the public sector, has been slow to non-existent for a long time. In the U.S., in contrast, non-farm employment rose from 71 million in 1971 to 110 million this year, a private-sector record attained, however, at the cost of stagnant real wages, rising inequality in income distribution and diminished job security.

There will be little incentive at the "jobs summit" to trade negatives back and forth across the Atlantic. But fortunately, the organization has a few positive suggestions that seem to find favor in U.S. and European policy circles. One would be to switch from the passive to the active in helping the unemployed. Instead of putting so much stress on jobless benefits, governments could require counseling, interviews and assistance in job searches. They would put greater emphasis on education, job training, apprenticeships and longer-range employment -- a field in which Europe often excels.

The OECD figures, which show European unemployment climbing from 9.9 percent in 1992 to 11.9 percent in 1994, are the mirror image of a U.S. jobless rate going from 7.4 percent in 1992 to 6.5 percent in 1994 (and perhaps as low as 5.5 percent in Mr. Clinton's re-election campaign year, 1996). Japan with unemployment in the 2 percent range would seem to be much better off, but only last week a Japanese think tank figured that "real" unemployment (counting those doing virtually nothing on the job) is in the 6 percent range.

Because all the advanced countries obviously have serious problems with unemployment, Mr. Clinton's call for a "jobs summit" when he was in Tokyo was more than just a public relations gimmick to tie foreign and domestic policy together for the benefit of voters back home. It could lead to serious discussions comparable to the "economic summit" he staged in Little Rock before his inauguration. But administration promoters of liberal social policies had better be forewarned that some of their favorite remedies might get sour billing from European officials who have to live with them.

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