Europe, jolted by unemployment, blames Reagan and 'tight money'
Paris — President Reagan's economic policies are coming under sharp attack at top levels in the European Community for adding to what one official called "calamitous" European unemployment.
"The growth of unemployment in the European community over the past three years has been nothing short of calamitous," says Ivor Richard, EC commissioner for employment, social policy, and education. Similar views are being expressed here at the annual ministerial meeting of the world's leading industrial democracies, the Organization for Economic Cooperation and Development (OECD).
In 1978, when the EC had nine member states, 6 million people were jobless. Now, with Greece turning the Nine into Ten, almost 9 million people are out of work.
By 1985, says Mr. Richard, the total is expected to reach 12 million as Western Europe struggles through what he calls the "worst recession since World war II."
High interest rates in the US compound the current problem, forcing European central banks to raise their own rates to keep capital from fleeing into dollar investments overseas.
Among the results, Mr. Richard says, are slow economic growth, more people thrown out of work, and mounting business bankruptcies as interest rates climb.
Major blame is laid on the Reagan administration's dependence on "monetarism" -- tight curb on the growth of the US money supply -- to fight inflation.
"Exclusive use of the money supply to control inflation has high social costs ," Richard says. His words echo the views of Paul A. volcker, chairman of the Federal Reserve Board in Washington, who warns the White House that too great a reliance on monetary policy pushes up interest rates, thrusts industries like housing and autos into depression, and boosts the US jobless rate.
Central bankers of the world, who have just met in Basel, Switzerland, have urged the US to relieve upward pressure on interest rates by broadening its policy mix in the battle against inflation.
Specifically, the bankers say, the Reagan administration should cut budget deficits and jawbone US trade unions into accepting smaller wage increases.
With wage agreements still averaging 10 percent or higher, the underlying inflation rate hangs tough at about the same level, although the narrower consumer price index rises more slowly.
President Reagan declines to intervene in the wage bargaining process, claiming that wage settlements will fall acceptably into line once inflation is licked.
As to budget deficits, Reagan aims at a balanced federal budget by 1984, through cuts in government spending that some critics at home call Draconian.
Such cuts, however, will take months to work their way into the economy. Meanwhile, the White House -- spurred by monetarists within the administration -- leans hard on the Fed to keep money tight, even if this means high interest rates.
Europeans, it would appear, cannot count on early or direct relief from the US, as they grapple with a scale of unemployment which, says Richard, threatens to "pauperize large segments of our society."
Hardest-hit labor sectors in europe, the EC official says, are the "young, women, and workers over 50. The latter may live out the rest of their lives on social security or welfare."
Using Britain as an example, he notes that the British labor force grows 2.5 to 3 times as fast as available jobs. How can these people be accommodated, when old-line industries are shrinking and new technologies are not labor intensive?
Work-sharing, early retirement, and a shorter workweek -- all must be explored, Mr. Richard says, but in an international context. Given the free flow of labor among the 10 Community members, changes in individual countries might simply shift the problem across frontiers. French President Francois Mitterrand advocates a 35-hour workweek, but in a European context.
Mr. Richard's segment of the European Community is preparing a package of suggestions for member governments, including:
* A need to review antiinflation policies for their social effects. (The Reagan administration should do this as well, in the European view.)
* While continuing to rationalize production -- i.e., replace men with machines, including robots -- ways must be sought to absorb castoff workers.
* Increased employment in small business holds out some hope, in Richard's view.
* All this must be done with compassion for "vulnerable members of society," he says, including a sense that goods and services are being fairly shared.
* Finally, various ways of shortening the time each person spends on the job must be examined, with the hope of splitting jobs, or sharing work, among people.
Some experts challenge this concept, unless the idea of less work per worker somehow can be meshed with rising productivity, or a brisker flow of high-quality goods.
Otherwise, critics say, Europe would find itself falling behind such nations as Japan, Taiwan, South Korea, and Mexico, which pursue an opposite path. These countries continue to work more intensively, not less, to upgrade the sophistication of their exports to penetrate markets closed to them in t he past.