Unemployment Plague

By Henry Muller

An ominous threat to political and social stability

He has a better education than most members of the street gang he hangs around with in the riot-scarred Liverpool slum of Toxteth. He has three years' experience as a galley boy on merchant vessels and, most important, a declared willingness to work hard. What Steve McGurty, 21, does not have, and is not likely to get, is a job. The merchant marine will not take him because he fell behind in his union dues. The army turned him down because he was fined $37 for being drunk and disorderly after a New Year's party. An architect's office rejected him, even though he has passed the test to be a draftsman trainee. The reason: he did not own a suit. "I am permanently hungry," McGurty says. "I can only afford one meal a day."

Nicole van den Thillart, 35, was a part-time social worker in the Dutch city of Utrecht until she decided to focus all of her energies on her studies in psychology and motor therapy. But she cannot find a job, even as an ordinary nurse in a psychiatric ward. "The crucial thing is to maintain a disciplined life," Van den Thillart says. "So, I make a program for every new day: get up at a certain time, do this, do that. I keep telling myself I will get a job, I am going to make it."

McGurty and Van den Thillart are part of an ominous phenomenon that has taken on alarming proportions in Western Europe. They are the victims of an accelerating wave of unemployment that now stands at a record level of 9.1 million, or 8.3%, in the ten nations of the European Community. That figure may not appear dramatically higher than the U.S.'s 7.5%, but any comparison conceals several key differences. While economists generally consider a jobless rate of 5% to 6% in the U.S. acceptable, governments in Western Europe, the cradle of socialist welfare democracy, have traditionally given full employment top priority. The loss of a job in Europe also has more permanent consequences than in the U.S. Only 13.1% of the U.S.'s unemployed stay out of work for more than six months, but the proportion is 47% in the United Kingdom and 53.6% in France.

Moreover, the Europe-wide average understates the human plight, and political explosiveness, of unemployment that approaches 20% in such industrially depressed pockets as Northern Ireland and Belgium's Wallonia.* Warns Ivor Richard, European Commissioner for Social Affairs: "This is bound to place immense strains on the social fabric of our societies. With the increased propensity to violence amongst those who feel they have been victimized, this could threaten the very roots of our democratic and free societies."

Western Europe's unemployment problem is the result not only of the economic slowdown caused by nearly a decade of brutal oil-price increases; it reflects a basic structural change: the waning of Europe's ability to compete in traditional manufacturing industries. The postwar years of cheap energy, cheap labor off the farm, low social-welfare overheads and huge unsatisfied consumer demand are gone. "There is no easy answer," says John Martin, a manpower expert at the Organization for Economic Cooperation and Development in Paris.

What is more, because Western Europe's 1960s baby-boom generation is just entering the job market, the problem will become worse in the years ahead. By 1985, according to the Brussels-based European Trade Unions Institute, the total could reach 15 million, counting the women, youths and chronic unemployed who have given up looking for work.

Unemployment has already become a powerful political issue in Western Europe. French President Franc,ois Mitterrand was elected last May in part because he promised a rigorous battle to create more jobs. West German Chancellor Helmut Schmidt's coalition is feeling the strains of the country's highest jobless rate since 1952. In Belgium, Prime Minister Mark Eyskens' center-left coalition fell a fortnight ago over job-costly plans to restructure the country's ailing steel industry. The outbreak of violence in Liverpool's Toxteth slum and other British cities last summer is widely blamed on frustration over rising unemployment, as are the nightly confrontations in the suburbs of the French city of Lyon. Warns Dutch Prime Minister Andreas van Agt: "The time for twaddle is over."

Most troubling to Europe's leaders is that youths under 25 account for roughly half of the jobless legions. Economists cite several reasons. One is that strong labor unions have successfully negotiated such job security for their members that little room exists in a tight job market for newcomers. "No one can be fired," Rome Sociologist Francesco Ferrarotti says. "You can't even get rid of a maid without getting into trouble." Another factor is that with the exception of West Germany, most countries lack adequate apprenticeship programs to train youths to perform skilled jobs. In France, according to J. Paul Home, Paris-based analyst for the investment-banking firm of Smith Barney, Harris Upham and Co., easy access to higher education in Western Europe has created a "crisis of expectations." Says he: "The young simply feel they won't and don't have to do menial work." Thus 3 million Turks, Yugoslavs, Spaniards, Portuguese, North Africans and other migrant workers continue to hold jobs that unemployed natives of the Continent's wealthier countries will not accept.

Women, too, suffer disproportionately. In West Germany, typically, unemployment is almost twice as high for women as for men. The imbalance would be even greater if discouraged women did not so readily quit searching for jobs.

So far, the Continent's encyclopedia of social legislation has helped contain the problem by offering a generous safety net to those without work. In France, the government guarantees laid-off employees 75% of their final salary for the first three months. Those who have never had a job receive $9 a day. But while these measures protect the unemployed from undue physical hardship, they do not alleviate the psychological damage of being rejected. A breakdown of the situation in Western Europe's largest nations:

United Kingdom. Critics now refer to Prime Minister Margaret Thatcher as "Tina," an acronym of her repeated declaration that "there is no alternative" to her government's punishing policies. Although unemployment has more than doubled from 5.4% when she took office in May 1979 to 12.4% last month, Thatcher adamantly believes a decline in the inflation rate, now 11.5% annually, is a precondition to economic growth. "I did not promise a quick answer," she told Parliament during the Liverpool riots. She is fighting to hold average-wage increases to 4% for the country's 7 million public sector employees (civil servants, the military, and workers in state-owned enterprises like British Steel).

France. President Mitterrand, who desperately wants to keep unemployment, now 7.7%, below the politically volatile 2 million (8.3%) mark, has embarked on a course diametrically opposed to Thatcher's. He is boosting government spending in order to reach an annual growth rate of 3% next year, vs. .5% now. The 1982 budget unveiled last week calls for 61,000 new jobs to be created in such public service areas as health and education in addition to the 54,000 already funded for 1981. At the same time, the retirement age will be lowered from 65 to 60, the work week will gradually be shortened to 35 hours, and companies taking on more labor will be subsidized. The cost: $6.5 billion in new taxes and a $17 billion deficit that France, ironically, can afford next year because former President Valery Giscard d'Estaing left a full kitty.

West Germany. The country's reputation as Europe's economic powerhouse has taken a beating as oil-price increases brought economic growth to a halt. From 736,800 (3.2%) only two years ago, the jobless rate has swollen to 1.4 million, or 5.8%. Josef Stingl, president of the Federal Institute of Labor, warned last week that the number would probably rise further. One consolation: there is no evidence that the jobless have joined the middle-class youths who have rampaged through West Berlin and other cities to protest the lack of adequate housing. In the industrial Ruhr Valley, where unemployment is worst, there has been no street violence.

Italy. Although the published unemployment rate of 8.6% is above the European average, economists point out that the true figure, paradoxically, is perhaps only half as high. Data are distorted because many of those on the dole actually hold down jobs in the clandestine "black economy." Nor are politicians unduly concerned about the 1 million youths without jobs. In Italy being jobless does not carry the same stigma as in Northern European countries steeped in the Protestant ethic. "Let's put it this way," Sociologist Ferrarotti explains. "An unemployed youth in this country is considered to be just waiting for his right chance. He is in parcheggio (in a parking lot). He is not on trial and alone, as he would be in the U.S."

Europe's leaders have reached no consensus on what should be done about the crisis. Most countries are somewhere between Thatcher's monetarism and Mitterrand's Keynesian approach, a distance too great to allow for common policies. One of the more imaginative, if long-range, concepts is the plan of French Foreign Minister Claude Cheysson, to press for sharp increases in aid to the Third World. This would generate demand for European products and therefore new jobs. Aid would mean trade.

But there is bleak pessimism these days in Western Europe when officials talk about unemployment. "What we are up against in all industrial societies is a continuous process of change," a top E.C. official in Brussels explains. "But Europe doesn't have the dynamism of the U.S., nor whatever it is the Japanese have. We have a lovely culture, and we want to keep it, but we have to start thinking about change." --By Henry Muller. Reported by William Blaylock/Paris and Lawrence Malkin/Brussels, with other bureaus

*The outstanding exception is non-E.C.-member Switzerland, where unemployment is a steady 1%.

With reporting by William Blaylock/Paris, Lawrence Malkin/Brussels

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