Behind the Pink Slips.

Heads are rolling across Europe, and the list of axmen reads like a Who's Who of blue-chip companies. More than 400,000 job cuts have been announced by the likes of Philips, Alcatel, Deutsche Bank and Ericsson, and that's just the publicly traded firms. Private companies, from dot- coms to large family-run businesses, don't have to report such moves. There's likely more to come. Most economists now believe Europe is headed into recession, and job losses dampen consumer spending, prompting even more cuts. "This looks like the early stages of the weakest labor market since 1993," warns Julian Callow, inter- national economist for CS First Boston in London.

It's a bit too simple, however, to speak of one Europe at this moment. For years the region has battled the disease of "Euro-sclerosis," a hardening of industrial contracts that prevented companies from firing anyone, no matter how incompetent. The phrase went out of style as unemployment fell during the rah-rah boom times of the late '90s, but as recession looms the basic problem is still there. The current layoffs don't quite represent a cure, but they do suggest big, uneven changes. Behind the broad numbers are several emerging Europes, defined not so much by country as by industry, type of work and business culture.

Consider the techies. Layoffs are coming fastest in technology and telecommunications, which expanded rapidly during the recent Internet craze, often outside the bounds of traditional European social agreements. Now they are shedding jobs by the tens of thousands, unobstructed by union rules and laws designed to protect workers. Most of these cuts are in the army of millions of temporary and part-time workers hired across Europe during the 1990s. Unprotected by organized labor, the temps and part-timers go with an uncharacteristic sound for European workers: resigned silence. You have to look closely, suggests Christel Rendu de Lint, European economist with Morgan Stanley Dean Witter, but "a lot has changed behind the scenes."

In the 1990s new labor laws made it practical or, in some countries, legal to hire temp workers for the first time. Rendu de Lint estimates that 90 percent of the 10 million jobs created in Europe over the past decade were on temp or part-time contracts. The temp boom was not limited to techies. The German auto industry has added 106,000 jobs since 1994, almost entirely on temporary contracts. In France temporary and part-time jobs rose sharply, and now account for 30 percent of the work force. Afraid to hire new workers for fear they couldn't be fired, companies were more comfortable with temps. Unemployment in the 12- nation Eurozone fell from a peak of 11.6 percent in 1994 to 8.9 percent in 2000.

Now unemployment is threatening to rise again in 2001, due to the global downturn. The temp force bears the brunt, because their contracts are easier to break. In 2000 the temp sector was up 15 to 20 percent in Germany, Denmark, France and Spain, and soared 200 percent in Italy (where it was illegal until 1997). But this year "it is flattening out big time in Europe as a whole," says Jaime Fortescue of temp agency Randstad of Amsterdam.

Real jobs are disappearing, too. All 7,000 job cuts announced in April by Philips Electronics of the Netherlands are full-time employees, a sign of the growing ...