Europe Remains under the Sign of Poverty

“All the progress made in terms of unemployment vanished with the economic crisis, reads a recent report presented by the European Commissioner for Employment, Social Affairs and Inclusion, Laszlo Andor.

Corina Cristea, 18.01.2013, 13:52

The document reveals that 2012 was a very difficult year for Europe, with unemployment rates reaching record-high levels for the past 20 years. Statistical figures show that some 19 million people are out of work in the Eurozone. Family incomes have dropped, and therefore the risk of poverty and social exclusion has constantly risen. The most severely affected social categories are the youth, unemployed women and single mothers. Whereas before the crisis the EU unemployment rate was 7.1%, at present the average stands at roughly 11%, with big gaps between the northern and southern Eurozone countries. Economic analyst Constantin Rudnitchi:

Constantin Rudnitchi: “Over the past four years, since 2008, Europe has lost around five million jobs. The figure is relevant for the difficulties on this market. Many European countries seek solutions to reduce the fiscal burden per job. For instance, in Europe, the average total taxes per job account for a rough 40% of the total income received by the employee, whereas in the USA, Japan and Canada it stands at around 30%. So all European states, including Romania, aim to lower the tax burden on jobs, but unfortunately few have actually managed to do so.”

One in five households in Bulgaria, Cyprus, Greece, Hungary, Latvia and Romania face difficulties, and according to statistics, incomes have plunged in close to half of the EU member states. There are however countries, such as Germany, Poland, France or the Nordic states, where revenues have increased. All these countries have strong welfare systems and more resilient labour markets. The economic crisis, which has stripped the social welfare rights of millions of people, contributes to widening the gap between the EU’s richer and poorer members.

“Most welfare systems have lost their ability to protect household incomes against the effect of the crisis,” Laszlo Andor mentioned, and added that an improvement of state welfare systems “can increase the resilience to economic shock and facilitate a faster exit from the crisis.”

The European leaders are making sustained efforts to find viable solutions, for a quick recovery from the economic crisis and for making the monetary union more efficient. Nevertheless, the British Prime Minister David Cameron has warned that he will block the revision of the EU Treaty regarding the creation of a monetary union, unless the community partners agree to the changes required by Britain, which, according to PM Cameron, is perfectly entitled to ask for a change in its relationship with Europe. David Cameron has said:

“Whats happening in Europe right now is a massive change being driven by the existence of the euro. The countries in the Euro zone, theyve got to change to make their currency work – they need to integrate more, they need to make changes to all their systems. What that means is they are changing the nature of the organisation to which we belong. And so we are perfectly entitled to ask for changes ourselves.” Britain can reject, by using its right of veto, the changes necessary for the supervision of banks and deficits, because any change in the treaty needs to be approved by all EU members. European sources, however, say that it’s not sure yet if the treaty needs to be changed, but if so, in case Britain opposes it, there is always the solution of singing intergovernmental agreements. This sort of dissensions brings back older tensions among EU leaders.

Constantin Rudnitchi: “European leaders have a dilemma this year: does the EU need further integration or not. This is the main issue debated in the European chancelleries as well as by EU citizens: whether we like it or not, Europe is now at the crossroad. If we think of the main reason behind the creation of the European Union, then the right choice would be to push for further and deeper EU integration. A single market means the free circulation of goods and services, of the capital and the labour force. At the same time, the crisis has made a series of countries and even regions have divergent opinions as regards the idea of a more integrated Europe, for various reasons. The best known case is that of Britain, which in spite of the fact that it is not part of the Fiscal Pact, insists on having a say on everything, or at least on Europe’s initiatives regarding a further integration.”