In a speech understood to reflect a statement of principles to be issued at the conclusion of the talks, Mr Clinton also repeated US calls for lower European interest rates and Japanese measures to stimulate domestic demand to bring down unemployment caused by recession.
Without a growing world economy, Mr Clinton said, it would be difficult to tackle the structural jobless crisis. It would also be easier for the US to meet the challenges of the global economy if other leading countries followed similar policies. And he urged the conference to lay the groundwork for the World Economic Summit in Naples next July.
The President has already floated a proposal for a global jobs plan based on economic stimulus in Europe and Japan, together with more active government policies in the labour market. But he made it clear that the threat of job destruction from increasing free trade, technological change and the creation of a global economy was occurring with 'stunning speed' and had to be met head-on. The President said there was a 'crucial choice' between erecting protectionist walls or creating 'high-wage jobs and preparing people to fill them'.
Top US officials are also citing the fact that, though the US creates many more jobs than Europe, real wages have stagnated or fallen. But for those in work in Europe, real wages have increased substantially.
Mr Clinton's speech was welcomed by Kenneth Clarke, the Chancellor, and the European Commission. Mr Clarke said: 'We are completely at one with the President's speech. Certainly he is putting forward themes entirely in line with the British Government.'
However, there was some evidence last night that Mr Clinton's speech and different approaches to labour market issues had provoked disagreement among the G7 countries. Mr Clarke admitted that the President's call for lower European rates had provoked some concern in the German delegation, and he added that he sympathised with the Bundesbank's cautious approach to cutting rates.
Likewise, he said all delegations pressed the Japanese on when their economic stimulus measures would finally take effect. But he added that 'there was no serious controversy' among the G7 countries.
The Chancellor said the talks would conclude with a set of principles on new labour market policies on which Britain, the US and Germany were 'very close indeed'.
On the challenges facing the G7, Mr Clinton warned: 'Unless people are prepared for the jobs of the future, that productivity benefits them and that they can have both strong work lives and strong families in a dynamic economy, they will turn against change.'
People had to be persuaded that productivity was a source of job creation, not a threat to their jobs. 'Productivity in one area creates technological change in another.'
Workers should be prepared to increase their skills and be prepared for a lifetime of learning. He warned that the growing gap between the incomes of skilled and unskilled workers threatened the fabric of society.
Unemployment benefit systems should no longer be based on the assumption that the jobless would be able to return to their former work, emphasising the need for benefit systems linked firmly to retraining.
People had to be prepared for up to eight job changes in a working lifetime. Employers, meanwhile, had to learn to treat workers as their most valuable asset.
He also attacked the bias against hiring young people on the grounds that they had no experience, especially in societies with ageing populations.
Another challenge was to offer working people security through better healthcare and child care.
Despite suggestions that Britain might be isolated because of its emphasis on free markets and labour market flexibility, such as wage cuts and part-time work, Mr Clarke insisted that Britain was very much in the G7 mainstream.
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