`Quite Frankly, Being Unemployed Stinks'Blanca Riemer and Richard A. Melcher
These days, Bill Goodliffe, a British truck driver, lives anything but the good life. Seven months ago, the 29-year-old was laid off. Unmarried, he manages to make ends meet by combining his weekly $75 unemployment benefits with a little help from his folks. Every day, Goodliffe checks the bulletin boards at a local employment center for new jobs. But so far, no luck. "Quite frankly, being unemployed stinks," he says.
European companies are suddenly cutting workers at a furious pace. Goodliffe counts among the 900,000 Europeans who have lost their jobs in the past year, most of them in the past five months (chart). As Europe's downturn grinds on, the jobless toll in France is now at an all-time high, while unemployment in Britain is heading back to the disastrous levels of the mid-1980s. The job cuts are hitting people across the board: young and old, men and women, skilled and unskilled workers.
RUNNING SCARED. Even though the slowdown is relatively mild, except in Britain, corporations are making more drastic cuts than in past recessions. Most are running scared. The reason: They fear an onslaught of competition, especially from the Japanese, as the single market of 1992 nears. Says Bill Brodrick, a union official of the Transport & General Workers at Ford's plant in Halewood, England: "Everyone realizes only the fittest will survive." And few are convinced that the modest 2.5% growth projected for Europe next year will be enough to merit new hiring.
This time around, there are no quick fixes. In past downturns, governments came to the rescue by pumping money into generous job-creation schemes. But as they move closer to monetary union, governments are unwilling to step out of line and take on huge deficits.
Hardest hit is Europe's service industry, the engine of growth in the 1980s. That's especially true in Britain, where the advertising, banking, technology, and retailing companies that went expansion-crazy are now reeling. In the past year, British Telecommunications PLC cut its work force by 18,000, to 226,000. On June 28, clothing retailer Burton Group PLC, which bet millions on property development, sacked 1,600 workers and slapped a wage freeze on everyone else. Main streets in the once booming towns of southern England are lined with for-rent signs and shuttered retail outlets. Typical job seekers at British employment agencies such as Drake, Beam, Morin Ltd. are 40-year-old, middle- or senior-level managers formerly earning $62,000.
FURLOUGHS. Things are just as bad on the Continent. Dutch airline KLM announced plans to trim 3,100 employees by February 1992, or 12% of the work force, readying itself for turbulence as the market deregulates. And with advertising revenues plummeting, Antenne 2, France's state-owned television network, just cut 377 jobs.
Europe's manufacturers, who thought the worst downsizing had passed, are also giving out pink slips. So far this year, 70,000 workers in the French auto, textiles, and electronics industries have been sacked. Auto parts supplier Valeo, one of France's growth stars of the late `80s, laid off 1,200 workers in February as car sales tumbled. Italy's Fiat has been furloughing thousands of workers one week out of each month since September. With sales in Britain forecast to drop 22.5% this year, Ford of Europe Inc. is cutting production back to three days a week at its Halewood plant and will make some 2,000 job cuts. And facing a collapse in defense spending, British Aerospace PLC has trimmed its work force by 23% over the past 18 months.
Germany remains a special case. With $140 billion in government and private funds pouring into reunification, Germany has added some 700,000 jobs in the past year, half filled by easterners. But joblessness in the east is expected to peak at around 45% in coming months, pushing up the country's overall unemployment figures to 15%.
As the jobless ranks swell, politicians are feeling the heat. In Britain, the Labor and Conservative parties are making unemployment a key election issue. They should. A staggering 23,161 British businesses collapsed in the first half of 1991, and 900 companies are going out of business each week, according to Dun & Bradstreet Ltd. Prime Minister John Major is calling for a boost in vocational training, while Labor wants to require companies to pump 0.5% of payroll expenses into job-training programs. France's North African communities are also growing tense, as youth unemployment skyrockets. Prime Minister Edith Cresson has made job creation her "first priority." Cresson wants to make professional training more efficient and bolster small enterprises.
KINDEST CUTS. Fearing a political backlash, many governments and companies are angling to get workers off the payroll without firing them. Dutch workers often opt to qualify as disabled rather than unemployed to get better benefits. Philips Electronics has laid off some 25,000 workers worldwide in a restructuring plan to cut 55,000 from its work force by yearend. Many Dutch employees will retire or go on the state's disabled payroll. Belgium's Generale Bank is trying to cut out 1,500 jobs through early retirements and attrition as it braces for stiff competition in 1992. And Italy's Fiat is relying heavily on cassa integrazione, a state-run system to lay off workers for a fixed period at 90% pay.
Many argue that a leaner, meaner Europe Inc. is just what's needed to fend off such heavyweights as Japan's Nissan and Toyota in a single market. "We'll need a big increase in volume before we add workers," says Yves Blanc, director of finance at France's Valeo. For labor that's bad news. And nobody knows that better than Bill Goodliffe.