• Austerity comes with a price: poverty (Photo: Antonio Marín Segovia)

Charity documents 'human cost' of EU austerity

27.03.14 @ 18:01

  1. By Valentina Pop
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Berlin - Evidence gathered by Caritas Europa, a network of charities working with the most deprived, shows that the impact of austerity programmes in Cyprus, Greece, Ireland, Italy, Portugal, Spain and Romania has "disproportionately" hit the poor.

"Five years since the beginning of the crisis in 2008, there is little or no growth, there are ongoing massive increases in unemployment and millions of people are living in poverty," the report published Thursday (27 March) reads.

In Greece, despite the current narrative that the country has turned a corner and achieved primary budgetary surplus, Caritas "points to a tremendous impact on Greek society during 2013 of increases in taxation, reductions in social benefits including pensions, higher costs of commodities due to increased indirect taxes and rising unemployment".

The reports mentions "households that could not afford heating during the winter and of some without electricity", "an unprecedented lack of access to social services, including health services" and "serious psychological problems", with Greece having a high rate of suicides. Homelessness is also estimated to have gone up by 25 percent since 2009.

"Births have dropped by just over 10%, and stillbirths increased by 21% between 2008 and 2011 according to researchers at the National School of Public Health. The researchers link the fall in births to the deepening recession and the rise in stillbirths to an increase in unemployment amongst women, who, if unemployed for over a year, not only lose their benefits but also their public health insurance," the report reads.

Part of the reforms demanded by the troika of international lenders was a reduction in the number of public sector workers and a more "efficient" administration.

The Caritas report shows how these reforms translated into practice: people with disabilities and pensioners having to wait for months for their allowances and pensions because there is not enough personnel to process all the claims.

Cyprus, the most recent addition to the list of countries to have entered an EU-IMF bailout complete with austerity requirements, is also also feeling hardship.

"The impact of the crisis and the more recent austerity measures are being felt by Caritas personnel providing services on the ground. Since March 2013, boxes with food and household items have been distributed to many families. In 2013, the migrant section of Caritas was dealing with many cases on a daily basis, as they find that migrants and asylum seekers are especially affected," the report reads.

Spain's record unemployment rate (5.7 million people in 2012, the highest in the EU) has translated into an increase in the number of Spaniards seeking the help of Caritas. Previously it was mostly migrants and refugees going to the charity.

Healthcare is an issue in Spain and also in Ireland, where public sector cuts have put the most vulnerable at risk.

In Portugal, public sector cuts may have avoided the healthcare system, but they have a negative impact on education.

"Massive reductions in the education budget in recent years are a potentially extremely damaging trend in both human terms and in terms of the development of the economy, given that Portugal already performs badly in important indicators such as early school leaving."

Demands on the services of Caritas Portugal have increased in recent years, with almost a doubling in the numbers of families who they were supporting in 2011-2012.

Italy, a country which introduced reforms and budget cuts in order to avoid having to ask for a bailout, has seen a rise of demands for charity services by 25 percent between 2011-2012.

The report notes that many poor Italians rely on an EU food surplus redistribution scheme which was changed at the end of 2013. "Caritas Italy is concerned that this will cause a social emergency involving more than 4 million poor people, something that needs to be addressed by activating a national fund for food aid."

Romania, a non-eurozone country which also was under an EU-IMF programme, "has a very widespread and deep problem with poverty".

The VAT increase from 19 to 24 percent introduced by the Romanian government in 2010 as part of the EU-IMF programme "has affected the incomes of poorer people by increasing the price of essential products". According to EU surveys, 35 percent of Romanians are living in low income households.

The main conclusion of the report is that "the policy of prioritising austerity is not working". EU decision-makers should instead "put in place benchmarks which assess the social impact of proposed economic measures before implementing them" and focus on social issues just as much as on fiscal oversight.

Austerity or bankruptcy

Meanwhile during a debate in Berlin on Wednesday, former European Central Bank board member Joerg Asmussen defended the response of the eurozone and the German government during the crisis.

"I think the approach was right and the success has been proven by Ireland and Spain exiting the programme, Portugal is expected to leave it this year. Growth is returning everywhere, even to Greece," Asmussen said.

He admitted that the choice of cutting healthcare and education budgets was "tough", but suggested there was no alternative to avoid bankruptcy in the absence of more "transfers, given the political situation by the donors".

And bankruptcy and a euro-exit was no real alternative for anyone involved, Asmussen said.

"Bankruptcy may look easy from an academic point of view. But a state is not a company. If a state goes bankrupt, there is no more money for schools, for hospitals, it is very damaging for all people involved," said Asmussen, who now works in the German labour ministry.

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