European Job Creation in the Wake of Plant Closing and Layoffs

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European job creation in the wake of plant closing and layoffs

Over the past decade, millions of American workers lost their jobs through plant closings and work force reductions. According to the U.S. Department of Labor, between January 1979 and January 1984, 11.5 million adult workers were laid off because of plant shutdowns or relocations, abolition of shifts or positions, or slack work. Nearly 5.1 million of these people were considered displaced, having held their former jobs for 3 years or more.1

By January 1984, 1.3 million of these workers were still unemployed, and of those, 500,000 had been out of work for 27 weeks or more.2 Hundreds of thousands more had taken pay cuts and part-time jobs simply to regain employment.

Europe, too, has undergone a massive economic shakeout over the past few years, generating little or no employment growth (in contrast to the increase in jobs in the United States). At the end of 1984, unemployment rates were at double-digit levels in the Netherlands (15 percent), Great Britain (13 percent), and France (10 percent).3 This economic turmoil has drastically affected certain communities as well. Particularly in the United Kingdom, areas characterized by "mono-industrialism' suffered unemployment levels far above 20 percent.

By comparison, the United States outperformed Europe in creating jobs for its people from 1970 to 1984. From 1974 to 1984, the U.S. economy generated more than 26 million jobs. Of the four largest European nations--with a combined labor market slightly larger than the United States in 1970--West Germany lost close to 1.5 million jobs and Great Britain, 820,000, while France and Italy did better, creating around 380,000 and 1.3 million jobs respectively.

While layoffs and shutdowns proceed on both sides of the Atlantic, the response of government and corporations to the problems created has been significantly more vigorous in Europe than in the United States. American corporations tend to provide, at best, severance pay, relocation assistance, retraining, or job counseling, or a combination of these benefits, for the workers they dislocate. And while the Federal Government will authorize $195 million in 1986 to aid displaced workers through Title III of the Job Training Partnership Act, the program falls far short of helping all those in need, and fails to ensure that enough jobs are created or sustained to employ those trained.

In contrast, European corporations--often working in concert with local, regional, and central governments--in recent years have gone beyond traditional types of assistance to workers and communities.4 While the programs vary considerably as to methods and scope, they share a common goal of stimulating job creation and new business growth in the wake of economic downturn. By examining both the achievements and limitations of these innovative efforts, American corporations can expand their repertoire of strategies for alleviating the problems of economic dislocation.5

Effects of streamlining

Across Europe, industrial sectors are experiencing thorough restructuring. In France and Great Britain, for example, nationalized firms have cut their labor forces and increased their productivity through eliminating less profitable facilities and investing in modern machinery. Corporate leaders see most of these changes as positive: many industries are leaner and more competitive, and new types of labor-management cooperation, such as quality circles, are emerging.

Yet, this industrial streamlining has proven devastating to thousands of workers and communities dependent upon corporations for employment. Continued stagnation in employment growth has provoked widespread alarm over the future of job creation. By the end of the decade, more than half of the unemployed in European countries will be long-term unemployed youth.6

However, Europeans in business, government, and labor increasingly are seeing entrepreneurship as the key to solving these labor market problems. …