A leaf out of Europe's book

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A LEADING American politician stood before a group of Washington policy makers last week and said the unthinkable: the United States should move its social policy closer to that of Europe.

Richard Gephardt, the House of Representatives majority leader, made it clear that he and other members of Congress are convinced that Europe has got it right in putting the emphasis on an economy of high-paying jobs and public-sector safety nets.

Even two years ago, his remarks would have been dismissed as the confused rantings of an anti-business isolationist, intent on protecting obsolete manufacturing jobs. But no longer. Mr Gephardt's goal, a fundamental overhaul of US policy in dealings with individuals from birth to retirement, is becoming mainstream. Venerable business organisations such as the 50- year-old Committee for Economic Development are espousing similar ideas. Laissez-faire is out and public- sector investment in 'human capital' is in.

The common demand from often divergent interest groups for a new approach to education and training is based not on lofty moral goals but on real fears over declining US competitiveness. Productivity growth has been a real struggle since the early 1970s. Average hourly wages, excluding fringe benefits, have actually declined at an annual rate of 0.4 per cent since 1973 after growing by 2.3 per cent from 1948 to 1973. Add to this the huge structural budget deficit, a record low national saving rate, plus a long period of chronic domestic under-investment and a picture emerges of a slow-growing economy struggling to generate jobs. A consensus is emerging that one way to counter this slide is to invest more in the health and training of people so that the US gains the advantage of a world-class workforce.

There is a dawning awareness that there must be a new approach, a fundamental institutional restructuring that tears down traditional barriers between business and government and between home and workplace.

The US workforce of the 1990s will be much more diverse than before. The Bureau of Labour Statistics estimates that employment growth rates for blacks, Hispanics and Asians will greatly exceed that of whites, while those for women in all categories will far exceed men. By the year 2000, women will make up 47 per cent of the US workforce and account for 62 per cent of its net growth between 1988 and 2000.

Along with the dramatic changes in the 'average' American family - the percentage of single-parent families has tripled since 1960 - there has been a startling demographic transfer. The number of elderly people living in poverty has been cut in half since 1970, while the number of children in poverty has risen by 35 per cent, making them the poorest social group.

Books have been written about the effects of the lack of national healthcare and the abysmal American day-care system. The renewed emphasis on programmes from birth is based on the well-documented costs to society, in its schools, prisons and ill-prepared workforce, of past neglect.

One theme in the birth-to-retirement debate is the need to tear down structural rigidities that make it nearly impossible to link business, government, employers, schools and workers in common endeavours. Almost everyone has a horror story to tell about an encounter with one bureaucracy which undercut the policies of another, just to preserve turf.

Business, for example, should not be frozen out of public policy but instead should be given tax credits for investing in 'human' capital programmes - day-care, worker retraining and the like - just as it is for other capital investments.

If the national goal is to develop more apprenticeship programmes, business, schools and communities must work together to develop the right skills. The US does an awful job of preparing secondary pupils who are not bound for university. Fewer than one in eight enter the workforce with any training for specific occupations.

The life-cycle policy debate is based on the belief that if people are frozen into rigid tracks based on a one-shot injection of skills, they and society will suffer as both become obsolete.

For nations to stay competitive, they must produce healthy, motivated students who are ready to be trained. And all parties must co-operate to upgrade these skills if the society is to remain productive.