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British take breather in eye of unemployment storm

By David K. WillisStaff correspondent of The Christian Science Monitor / July 29, 1981



London

All over Western Europe, young people under 25 are out of work -- about 4 million of them. The problem is most acute in Britain, where some estimates put teen-agers without jobs at 900,000.

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One out of every two British youngsters now leaving school cannot find work and goes straight onto the dole (unemployment relief). Privately, government studies forecast total unemployment -- already more than 2.8 million -- will continue to worsen for the next 30 months. This means big political trouble for Conservative Prime Minister Margaret Thatcher. She is already facing severe urban riots (more broke out in Liverpool July 27 and 28, with youths throwing stones and petrol bombs at police) and a resounding defeat in the recent by-election in Warrington.

More significantly for Britain as a whole, officials now are deeply concerned that massive unemployment among young people might begin to alienate a whole generation from a society that it believes spends more on nuclear arms than on jobs.

The July 28 headlines competed with happier ones about last-minute preparations for the royal wedding, but not even the joy sorrounding the wedding can banish the cares of the recession. Indeed, the intensity of the wedding spirit owes a great deal to the need to escape, if only for a moment, the grimness Britain faces in the period ahead.

So Mrs. Thatcher now has produced one new idea and has expanded some old ones. Reaction, so far, is mixed.

The new idea is to pay companies L15 ($28) per week for every person they hire under the age of 18 -- provided the youngsters haven't worked before and their salaries are less than L40 ($74) a week.

Some $60 million has been allocated for the plan in its first year next year. The plan comes from Thatcher economic adviser Alan Walters, who sees more jobs if companies can pay much lower wages to young people than they do to older ones.

Yet there are deep doubts here that the idea can have much impact. The voice of British business, Sir Terence Beckett, director-general of the Confederation of British Industries (CBI), told the Monitor at lunch before the plan was announced that industry could not hire many more staff until demand picked up.

At the moment, he said, the CBI saw no no sign whatever of any upturn.

Still, the new idea, combined with other measures in Mrs. Thatcher's just-announced package (such as encouraging youngsters to stay at school to learn computing or to do voluntary work), does add up to a shift in emphasis by a beleaguered government. From concentrating primarily on inflation, Mrs. Thatcher now is elevating the need to find new jobs to almost equal billing.

She stoutly rejects the idea of the government U-turn, though some sources do speak of an S-bend. With two years to go before the next general election, the Thatcher government is highly unpopular in many parts of the country. The refusal of unemployment to go down makes many ministers distinctly nervous. If senior Cabinet men decide the Conservatives cannot win, there could be moves to drop the prime minister -- and she is said to be well aware of it.

The ideas expanded in her new package include a widening of the Youth Opportunities Program (YOP) under which the government pays a tax-free allowance of L23.50 ($44) a week to 16- and 17-year-olds. The plan finds them places in training and work-experience programs.

Already keeping 440,000 youngsters off unemployment rolls, the plan is to be expanded by another 110,000 places.

The expansion was pushed by Employment Secretary James Prior, a senior Cabinet officer long in conflict with the Treasury, which wants to hold down government spending.

The compromise now reached is that extra spending for this year (about L150 million or $280 million) will come from a government contingency fund, reducing it to just under $2 billion ($3.7 billion).

But extra spending for 1982-83 (some L700 million or $1.3 billion) is to come from normal government sources. To avoid raising inflation Mrs. Thatcher will have to find compensating cuts elsewhere.

Mr. Prior's aim is to guarantee every youngster unemployed for three months a YOP place by Christmas -- and to repeat the performance next year. Critics say YOP rarely leads to permanent jobs, that the allowance to the youngsters is too low, and that large numbers of young people are now emerging from YOP places still with no permanent job in sight.