UK faces clash at jobs summit

THE GOVERNMENT faces an embarrassing new clash with some of its most important international partners over job creation, at a top-level American-sponsored conference in Detroit this month.

The jobs summit, organised by the G7 group of industrialised nations, was finally given the go-ahead last week, on the eve of John Major's high profile visit to Washington, which begins today.

The conference, which is highly sensitive for Britain, was set up on the personal initiative of President Clinton and will discuss 'implementing an international jobs agenda'.

Two of the Cabinet's most senior ministers, the Chancellor, Kenneth Clarke, and the Secretary of State for Employment, David Hunt, will publish a paper, probably this week, to set out Britain's commitment to flexible labour markets. Both men will attend the conference on 14 and 15 March.

The British document will aim to head off a potential ambush from some G7 countries anxious for greater stimulus to the international economy through infrastructure investment or spending on research and development.

The Government was embarrassed last year by a bitter battle within the EU over the content of a white paper

compiled by Jacques Delors, President of the European Commission, called Growth, Competitiveness, Employment.

Four European nations are represented in G7: Britain France, Germany and Italy. While ministers such as Mr Hunt have devoted efforts to wooing EU partners, the position of the three continental European countries is causing concern. One source said that the threat of an 'ambush' is 'always on the cards given the way the rest of Europe operates'. The other members are the United States, Canada and Japan.

Britain will seek to counter any calls for Keynesian expansion by stressing that a flexible labour market, complemented by an effective training policy provide the best mechanism for reducing joblessness. Although unemployment rose last month, bucking the trend, Mr Clarke and Mr Hunt will argue that the UK has a good record of job creation.

However, British diplomats are also unsure about the direction of the US administration on economic policy. The United States, which already has substantial labour market flexibility, will be anxious to explore other mechanisms for generating employment. US officials believe that boosting world output, possibly through coordinated international measures as well as increased trade, must be given the highest priority.

The summit will also give the Opposition the chance to go on the offensive over the continuing high level of unemployment.

The idea for the jobs conference arose out of last year's G7 heads of government meeting in July, but its timing has been agreed only recently.

Mr Major may discuss the jobs agenda in Washington tomorrow when he lunches at the British embassy with the US Treasury Secretary, Lloyd Bentsen; Mickey Kantor, the US trade representative, and Alan Greenspan, chairman of the US Federal Reserve Board.

The agenda for the final session, which will be chaired by Mr Bentsen, includes 'areas for further development' and 'building coalitions for change'. Earlier the delegates will debate whether there should be an increased government role in technology and innovation, industrial restructuring, research and development and in the creation of infrastructure.

They will also discuss whether the nature of job creation has changed because of the growing integration of the world economy.