BUSINESS

The Motown summit

G-7 ministers gathering in Detroit make little progress on a strategy to reduce unemployment

Anthony Wilson-Smith March 28 1994
BUSINESS

The Motown summit

G-7 ministers gathering in Detroit make little progress on a strategy to reduce unemployment

Anthony Wilson-Smith March 28 1994

The Motown summit

BUSINESS

G-7 ministers gathering in Detroit make little progress on a strategy to reduce unemployment

ANTHONY WILSON-SMITH

"Chart the course of the information highway.” “Transform the social safety net into a springboard to new employment.” “Allow people to find new jobs that are also better jobs.” If there were many other clichés left publicly unsaid when representatives of the world’s seven leading industrialized countries met in Detroit last week, it was only because most of their meetings took place in private. After two days of meetings, their conclusion was that unemployment in all countries is unacceptably high—and that G-7 members must work together to find solutions. Or, in the words of Human Resources Minister Lloyd Axworthy, one of four senior Canadian ministers who attended the meeting, “We have recognized that we cannot solve these problems alone.”

Still, the G-7 members set deliberately modest goals for the meeting—and thus achieved their aims. Principally, they discussed the complex issue of why, in seven of the world’s richest countries, it is now so difficult to find work. With more than 30 million unemployed people spread across the G-7, they had ample evidence of the scale of the problem they face. By comparing existing job creation policies, they were also obliged to confront, in comparative figures, evidence of expensive job creation policies that are not working.

Sometimes, those figures are startling: for example, according to the Paris-based Organization for Economic Co-operation and Development (OECD), the two G-7 members that spend the least proportion of their gross domestic product (GDP) on labor training programs are Japan and the United States, at 0.03 per cent and 0.14 per cent respectively. Still, they also boast the lowest unemployment figures of member countries, at 2.7 per cent for Japan and 6.7 per cent for the United States. By contrast, France and Italy, the two countries that spend the highest percentage of GDP on such training, are among the three G-7 members where unemployment is above 11 per cent. (Canada, with 11.1 per cent unemployment, spends 0.29 per cent of GDP on labor market programs.)

One of the reasons for the discrepancy, as representatives from each country were careful to explain, is the different nature of their respective economies. (In fact, both the United States and Japan protested the OECD figures, noting that they do not take into account such factors as in-school training, which is financed by government funds but not included in those totals.) The United States, for example, is increasingly a service-based economy, and its low unemployment rate is counterbalanced

by the fact that many of the new jobs there are low-skill, low-wage positions. On the other hand, most analysts agree that Japan’s unemployment rate is artificially low because of a long-standing tradition of companies providing lifetime employment guarantees.

Many of the countries brought their own

catalogue of complaints to the meeting. Officials from France said they are cooling their previous enthusiasm for retraining programs for a practical reason: technology is changing so rapidly that those programs do not always keep pace with innovations. For Canada’s part, Martin said that concern does not apply because “we are a less structured society than the French, which allows us to be more flexible in our programs and planning.” There is a more fundamental disagreement, however, with Britain’s position. At a time when support for government training programs is clearly in vogue, the British dele gation aroused irritation with its cool approach to the idea. British Employment Secretary David Hunt told Maclean’s prior to the meeting: “The socialists on the far left of European politics believe there is a great master plan [to create jobs] which involves huge public expenditure. We don’t agree with that.” That philosophy runs counter to the Canadian government’s belief that government should function, as Axworthy said, as “encourager and service provider” to the private sector. As well, the British delegation expressed its views with a vehemence that led to sharp off-therecord criticism from Canadian and American officials. They privately described the British approach as “high-handed” and “hectoring.” But publicly, Axworthy and his colleagues—Martin, International Trade Minister Roy MacLaren and Science and Industry Minister John Manley—took pains to emphasize that Canada agrees with Britain on the funda| mental notion that it is not govem5 ment but “the private sector [that] generates the jobs we seek.”

The response only underlined . the traditional futility of government attempts to deal with unemI ployment. Most of the G-7 countries, with the notable exception of the United States, created government-run job programs in the past, and found them expensive and inefficient. In the 1980s, that trend was reversed. Conservative governments in Britain, Canada and the United States argued that governments could create more jobs by doing less themselves. Now, that view has been revised to the present notion—that government cannot give people jobs, but it can do more in a time of rapid change to retrain them, and help them find a new one. ‘Technology,” said Axworthy, “should come to be seen as a source of job opportunity, not job loss.” That may be true, but the G7 countries share 30 million living examples that suggest that is not happening.

ANTHONY WILSON-SMITH in Detroit with E. KAYE FULTON in Ottawa