Europe's Leaders Take On Unemployment

SHOULD Europe look to solve its staggering unemployment problem by rationing jobs as a rare and shrinking resource - or should it pick itself up and go for job growth?

European Community Commission President Jacques Delors is pushing for the latter, and that is the message he will take to European leaders when he presents his much anticipated white paper on ``growth, competitiveness, employment,'' at today's Community summit.

As unemployment across Europe has inexorably grown in recent years to affect nearly 18 million workers - 11 percent of the work force - a growing number of economists, business leaders, and politicians have latched on to various wage-cutting and generalized work-time reduction schemes as Europe's panacea.

``But such Malthusian solutions settle for managing a shortage,'' says an aide to Mr. Delors, ``while what Delors wants to emphasize is that Europe has the tools to address its problems and become a job creator as we move into the 21st century.''

Cutting paychecks and work time would only reduce consumer demand, the aide says, and thus discourage job growth. ``In the face of rather widespread pessimism, [Delors] means to be optimistic,'' he says.

For Delors, the white paper - requested by EC leaders at their Copenhagen summit in June - is the first shot in a philosophical battle to shift Europe away from a make-do funk to a can-do determination. The tools are there, he says, including a skilled and educated population, strong research institutions, a centuries-old entrepre-neurial tradition, a strong banking sector, funds for investment, and a highly developed infrastructure - as well as markets to the east and south yearning for development.

But a traditional reliance on economic growth won't be enough to meet Delors's goal of 15 million new jobs by the year 2000. Germany and Spain have had similar average growth in recent years, the paper notes, but unemployment in Spain is much higher than that in Germany. Thus, simply waiting for recession to end is no solution. (The Delors plan, Page 4.)

To reverse Europe's slide, Delors will call for a combination of measures to reduce rigidity in labor markets, plow productivity gains back into job creation rather than wage increases, enhance job training, and make low-skill employment - of particular interest to Europe's millions of unemployed youths - less expensive for employers.

New emphasis, he says, must be put on preparing workers for such growth areas as biotechnology, health care, leisure, information processing, and telecommunications.

In addition, the white paper proposes increased and better coordinated investment in conventional transport and energy infrastructure, plus a new focus on development of ``information superhighways'' to secure Europe's participation in the fast-dawning ``information era.''

Commission officials headquartered in Brussels are careful to describe the paper as largely a ``set of leads'' for the EC's 12 member states to consider following as they address unemployment. At a time when the Commission has come under steady attack as being too centralized, calls for Brussels-directed action are few.

The two principal exceptions are the proposals for transport and information infrastructure development programs. Those two programs would require about $23 billion in annual spending through the end of the decade. About $10 billion of that would be ``new money'' raised through borrowing - largely accomplished with a new bond program, taking advantage of the EC's high credit rating, that Delors insists would add no new pressure to member states' budget deficits.

But the spending plan has already come under heavy attack from German and British finance ministers, both of whom point to the staggering indebtedness of most member states and insist that now is not the time for additional public spending.

For some observers, today's summit will indicate whether Europe is prepared to address the jobs challenge head-on. ``The problem is that there is no cohesion, none,'' within the EC, says Stanley Crossick, director of the Belmont European Policy Center in Brussels. Britain will applaud Delors' endorsement of labor market deregulation, for exam-ple, but sniff at new spending for ``information highways'' favored by France. He worries that EC leaders, many of whom are focused on electoral prospects, will favor short-term remedies.

OTHER observers worry that the employment debate could be overshadowed by an intra-Community row over GATT (General Agreement on Tariffs and Trade) trade liberalization talks set to conclude next week. France and Germany are already at odds over French demands for EC compensation for sacrifices it says French farmers would face from an EC-US bilateral trade accord. Spain and Portugal are also seeking compensation.

But with despair over job prospects dampening Europe's mood, most observers are counting on leaders to play down differences enough to emphasize common strengths and take some action.