Labor Dept. Plans for ‘Re-Employment’ : Economy: New job insurance system would put emphasis on counseling, training and placement. Critics say it will cost too much.

A day after President Clinton called on Congress to pass a radically different job insurance system, Labor Department officials sketched out plans Wednesday for a nationwide “re-employment” network that would offer unemployment compensation, career counseling and job training and placement.

The initiative, which the Administration hopes to introduce in Congress next month, would combine the patchwork of federal, state and local job training and placement programs into a single system to provide uniform services and information to jobless workers nationwide.

The proposal, contained in the Workforce Security Act, is one piece of a broad Administration policy that would change government’s relationship with Americans’ livelihoods and the nation’s workplace. It has broader appeal than some other elements of the strategy because it would serve people in a wide range of economic groups--from laid off high-tech workers to unskilled laborers.

“We are creating a system that links people to jobs and to the information and resources they need to get their next job,” Labor Secretary Robert B. Reich said in an interview.

Reich explained that the re-employment program would be phased in. If it is successful, he said, “within five or six years America will have a one-stop shopping” employment system.

Initially, the Administration will seek “substantial increases” in next year’s budget over the $1.4 billion already being spent on various displaced worker programs.

When fully funded, the re-employment network is expected to cost $3 billion, Reich said.

Reich contends that the Administration’s plan will save money by reducing the need for long-term unemployment. He noted that the government spent $14 billion last year alone in compensation to laid-off workers who had used more than the standard 26 weeks of unemployment benefits.

But many labor experts have suggested that the plan will be more expensive than envisioned because of the high cost of long-term training and the vast numbers of people who will use the services. Politicians and economists also have voiced doubt that there will be jobs available for people once their training is done.

The Administration contends that current unemployment programs do too little for people who are permanently laid off. Designed in the 1930s, it was effective when a large percentage of laid-off workers eventually were rehired. But as companies have downsized in recent years, three-quarters of laid-off workers do not get their jobs back.

Traditionally, the vast majority of unemployed workers receiving compensation had no services to help them prepare for and secure new jobs. But under extended unemployment compensation legislation enacted in November, all states are required to determine which workers have been permanently laid off and to provide job search assistance for them.

“People are saying we need a new public service--a new product,” a high-ranking Labor Department official said. “The old product is fine, but it’s obsolete.”

At any time, 2.2 million people in the country have been laid off permanently, according to Labor Department estimates. Of those, 1.3 million will need help finding new jobs, while between 200,000 and 400,000 of them will need training.

Short-term training programs have had dismal records for helping people get good jobs, so the new system would offer longer training programs and income support of up to 18 months.

“Every year of training after high school yields a return in terms of higher earning of 6% to 12%,” Reich said.

Long-term training does not come cheap, but the Clinton Administration argues that there is no other choice if America is to stay competitive in the world market.

The proposal will include several financial incentives for getting people into the work force sooner.

Recipients of unemployment compensation will be eligible for cash bonuses for finding jobs before their benefits expire. Partial benefits will be available for people who take part-time jobs.