Clinton plans global job creation: G7 meets to discuss unemployment crisis US President outlines proposals to stimulate Japan and Europe

PRESIDENT Clinton intends to launch a global job creation plan at the World Economic Summit in July, provided he wins the support of other industrialised countries at today's Group of Seven talks on the world employment crisis.

On the eve of a two-day meeting attended by finance and employment ministers from the G7, Mr Clinton said his plan would include proposals to stimulate the Japanese and European economies out of recession and to ensure that growth in technology and foreign trade helps to create jobs rather than throwing people out of work.

'Frankly I'm going to gauge how forthcoming and how open they all seem to be on this at this conference,' Mr Clinton said.

The President hinted that the outlines of the plan could emerge at this week's talks. To European irritation, the US has repeatedly called for lower European interest rates and higher Japanese public spending to revive economic growth. US officials have promised to work with, rather than confront, their allies at this week's talks, however.

The President nevertheless pointed out that public spending on generous European unemployment benefits, seen as an obstacle to workers accepting lower paid or part-time work, could be redeployed to bolster economic growth.

Whether the idea will be warmly received is unclear, but there is general agreement that Europe has high unemployment but rising real wages and that while the US creates more jobs, its real wages have fallen.

In a line likely to be welcomed by Britain, Mr Clinton intends to draw attention to the high cost of European welfare programmes, which the US believes is an increasing obstacle to job creation.

The two-day talks will focus on how jobs are lost through technological change, costly benefit systems and labour markets hidebound by regulation, in addition to the classical loss of jobs due to weak demand and recession.

The summit is likely to see the free-market British approach to tackling the jobless crisis largely rejected by its main trading partners.

President Clinton is already signalling his commitment to a new US interventionism in the labour market by a plan to boost government support for retraining labour.

But Kenneth Clarke, the Chancellor, and David Hunt, Employment Secretary, who attend today's talks, last week issued a paper urging continued trade liberalisation, scrutinising new regulations, promoting entrepreneurship, greater willingness by workers to accept wage cuts or part-time work, lower social protection, and 'support' for investment in training by employers and individuals.

It also called for reform of unemployment benefit systems to keep recipients in 'close touch with the labour market' - a euphemism for limiting the duration of benefits and lowering subsequent state support for the jobless to raise the incentive to accept low-paying jobs.

Other European countries accept there must be some dismantling of high non-wage labour costs, but believe this should fall well short of the UK's laissez-faire approach.

Japan is worried, meanwhile, that the tradition of 'jobs-for-life' is threatened by the recession and a shift of manufacuring production to low-cost South-east Asian economies, despite having the lowest G7 jobless rate of some 2.7 per cent.

The talks, attended by finance and employment ministers from Britain, Canada, France, Germany, Italy, Japan, the US and the EU Commission, are intended to push the job crisis to the top of the international agenda.

But the meeting is seen as more a seminar than a summit. 'There won't be any magic solution,' said Robert Reich, US Labour Secretary. 'I'm not banking on any communique, any big announcement.'

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