G7 makes global jobs crisis its main priority

FINANCE and employment ministers of the Group of Seven countries agreed yesterday to make the global jobs crisis the key issue at next July's World Economic Summit.

But as evidence emerged that Britain's emphasis on flexible labour markets was out of step with other countries, it was acknowledged that there was no single solution that would work for every country. It was agreed that every G7 country had a different approach to tackling structural unemployment - or joblessness unrelated to recession.

Robert Reich, the US Labour Secretary and architect of President Clinton's new interventionist jobs policy, dropped a broad hint on disagreement with the UK approach when he said some countries were 'too enamoured of the markets. I won't say there were any sharp exchanges but there were some courteous, sharp disagreements,' he said.

David Hunt, the Employment Secretary, said the fall in UK unemployment soon after the recession was due to trades union reform, more worker flexibility on pay, decentralised wage bargaining and the integration of benefit payments with advice on job search and training.

The G7's shift in emphasis from macro-economic policies to the jobs crisis is seen as permanent. Kenneth Clarke, the Chancellor, said it would 'dominate into the 1990s.' The US Vice-President, Al Gore, said it was one of the most important turning points in the post- war dialogue between the US and other industrialised countries.

In a closing statement by Lloyd Bentsen, the US Treasury Secretary who chaired the talks, ministers rejected an overarching role for government and agreed on the fundamental role of the private sector in creating jobs.

The seven highlighted the crucial role of small and medium-sized companies in creating jobs, and Mr Clarke hinted at further potential measures to boost venture capital investment in small UK businesses.

The Organisation for Economic Cooperation and Development has been asked to report to the Naples summit on the link between productivity, job creation and technology, and to expand its analysis of job creation and job loss.

The countries also agreed to exchange employment experts to encourage adoption of each other's policies, but beyond that gave no hint of further action.