Poverty gap widens between member states

08.01.13 @ 22:28

  1. By Nikolaj Nielsen
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BRUSSELS - The economic crisis, which has stripped the social welfare rights of millions, is contributing to a widening poverty gap between member states, the European Commission has said.

  • Incomes are going down in the south, but climbing in the north (Photo: .craig)

The worst affected are young people, unemployed women and single mothers in member states predominately located in the east and south of the Union.

"Most welfare systems have lost their ability to protect household incomes against the effect of the crisis," EU employment commissioner Laszlo Andor told reporters in Brussels on Tuesday (8 January).

Andor, who presented the commission's annual analysis on social and employment developments in 2012, said improving the design of state welfare systems "can increase the resilience to economic shock and facilitate [a] faster exit from the crisis."

His 496-page analysis found, among other things, that member states with the highest welfare spending are not those with the highest public debt.

The study says strong social protection, such as child care for single women and well-thought-out labour standards which provide access to benefits in times of difficulty, can contribute to reducing an an figure that "is hitting new peaks not seen for almost 20 years."

Almost 19 million people are now officially out of work in the eurozone, according to the latest figures published by the EU's statistical office.

"All the progress made in terms of unemployment vanished with the economic crisis," says Andor's report.

Just before the crisis hit in 2008, the EU unemployment average was at 7.1 percent.

Long-term unemployment now accounts for 42.5 percent of the jobless and will most likely spiral upwards due in part to growing redundancies and a skills mismatch.

The countries with the lowest level of long-term unemployment are also those, like Denmark and Luxembourg, which provide services like training and job counselling. Such programmes are largely absent in Baltic states and Greece where jobs are the scarcest.

Those lucky enough to find work are more likely to land part-time contracts.

As more people lose their jobs, especially in the member states in the south and east, the risk of poverty intensifies.

The study points out that almost half of all member states have experienced a net increase in poverty since 2008, with disposable household incomes dropping in two thirds of them.

One in five households in Bulgaria, Cyprus, Greece, Hungary, Latvia and Romania are now having trouble making ends meet.

A canteen at a primary school in an impoverished area in Lisbon reportedly remained open over the Christmas holidays because children risked malnourishment.

In comparison, incomes in Nordic countries, Germany, Poland and France increased. All have strong welfare systems and more resilient labour markets, says the commission.

"It is unlikely that Europe will see much socio-economic improvement in 2013," said Andor.

The dismal prospects of recovery in 2013 appear to contradict recent statements delivered by some EU leaders and notably, commission chief Jose Manual Barroso, who in Lisbon recently declared the worst of the euro crisis to be over.

Bailout conditions and associated austerity measures imposed by the so-called troika - composed of the commission, the International Monetary Fund (IMF), and the European Central Bank - have exasperated the dire social conditions of periphery member states, according to IMF economists who recently admitted to errors in predicting the impact on EU economies.

Meanwhile, Andor's analysis says part of the solution is funding investments to improve social inclusion and to help get people back into the labour market.

"We need social investment now, otherwise we'll see decline in our economic potential and much larger social costs in the future," said the commissioner.

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