Worsening Job Situation Weighs on Europeans : G-7 summit: As ministers meet in Detroit, continent endures historic rates of unemployment.

Official figures released last week confirmed what most western European political leaders already knew: Unemployment in the region, already alarmingly high, had jumped again.

As President Clinton prepares to welcome government ministers to the Group of Seven “jobs summit” today in Detroit, nowhere in the industrialized world does the problem of unemployment have a higher political priority than in Europe, nowhere is the issue more emotionally charged--and nowhere do the prospects for a solution seem bleaker.

As a result, European participants bring with them a record that is hardly a model to follow. And they seem to have few expectations that the summit will dent their collective crisis.

Pascal Lamy, a senior aide to European Commission President Jacques Delors, said Europeans were hoping the Detroit meeting would be “an open-minded brainstorming session” that would send a message back home that their leaders care about jobs.

“We (the G-7 nations) are from different cultures, but we have common problems,” he said. “It is important to see if there’s enough convergence to agree on some common principles that we can feed into the Naples summit”--a reference to the next full meeting of the G-7 in July.

Delors, whose shared concern about unemployment was said to have helped prompt Clinton to call the jobs summit, was originally scheduled to travel to Detroit. But he canceled his trip on short notice after crucial new negotiations over the EU’s enlargement were rescheduled for Tuesday in Brussels.

Instead, Henning Christophersen, the European Union’s commissioner for economic and financial affairs, will carry what is expected to be Europe’s main contribution--a discussion document known as the Delors White Paper drawn up with the goal of creating 15 million new jobs in Europe before the end of the century.

Considering that only about two-thirds that number of jobs were created in the EU region over the past two decades, the goal is ambitious.

The Europeans are suggesting a mixture of accelerated public works programs, work-sharing and job training schemes, together with a look at the impact on unemployment of western Europe’s unusually high wage costs.

Since it was presented to an EU summit here last December, parts of the Delors paper have been transformed into an action plan but so far have not been implemented.

The proposal was developed as a response to Europe’s worsening unemployment crisis. The continent is still stalled in the depths of its longest, deepest recession since World War II. Most economic forecasters expect the number of jobless in the 12-nation European Union--a group that includes most of the continent’s richest countries--to continue rising from its present record high of 16.4 million.

In Germany, where the total number without work last month topped 4 million for the first time since the Weimar era, jobs constitute the main election year issue. More than 3 million people are jobless in France.

In southern Europe, the crisis is even more acute, with youth unemployment last month hitting 39.2% in Spain and running at more than 31% in Italy.

Not even the unexpected strength of the U.S. economy in recent months and initial signs that the recession in Europe may finally have hit bottom are likely to be enough to ease unemployment in the foreseeable future.

The reason is simple: Europe’s jobs crisis goes well beyond the present recession. Indeed, it has been festering since the early 1970s, as western Europe’s welfare states began to mature and its aging industrial base first felt competitive pressures from lower-wage economies.

Today, while Europe’s welfare states provide a dizzying array of benefits for its people, these same benefits have become so expensive that they have begun to price European goods--and jobs--out of world markets.

While the average hourly wage cost in American industry runs just over $16 per hour, the same hour costs a German employer about $23. The prime cause of this differential is the employer-paid welfare benefits package.

In Belgium, for example, industrial employers pay an average of $10 per hour just for fringe benefits. In the United States, the figure is $4. This additional drag is often cited as one key reason western Europe has managed to generate only a quarter as many new jobs as the United States has since 1970.

The fall of the Iron Curtain--and the emergence of new industrial democracies in former Soviet Bloc countries as strong, low-wage competitors in low- and medium-technology industries--has merely intensified the effect of western Europe’s high wages and the export of jobs that inevitably results.

“Production costs too high, too much unemployment, too rigid structures--is Germany breaking apart as a an industrial location?” the leading news weekly, Der Spiegel, asked at the turn of the year.

Although Europeans certainly understand the logic of the disincentives built into their systems, two major factors make any radical changes unlikely. First, the welfare systems have become a part of the region’s identity and are widely viewed as a social good that must not be sacrificed. Second, trade unions--far stronger in Europe than in the United States--consider themselves the ultimate guardians of the welfare state and have shown they are prepared to defend it.

Instead of starting to bargain benefits for jobs under the pressure of record unemployment, organized labor in Europe has gone to the barricades to defend the existing system.

Cautious trims to welfare benefits have brought general strikes in Spain and Belgium and angry protests elsewhere. In France, such tension has frightened Prime Minister Edouard Balladur away from doing much more than tinkering to cut his country’s 12% jobless rate.

But a deal worked out last November between unions and management at Europe’s largest auto maker, Volkswagen, seemed to indicate the European public may be ready to accept a lower standard of living and share what work there is before it would sacrifice social benefits.

Volkswagen’s work force voted to accept a four-day week and a 20% pay cut rather than see the company shed 31,000 jobs.

Subsequently, the Bonn government has introduced legislation aimed at promoting part-time work as a way of job-sharing. And the national metalworkers union reached a pact with employers that cuts the work week to 30 hours from 36 to save jobs.

“There are a great number of people who really would like to shift to part-time work,” noted Juergen Schupp, an economist at the German Institute for Economic Research in Berlin. “But the government has to make it attractive by making sure those who do don’t lose their benefits.”

Times researcher Isabel Maelcamp in Brussels contributed to this report.

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