Sunday

26th Mar 2017

Austerity measures destroying EU social model: report

Austerity measures meant to pull Europe out of the crisis have put some 800,000 children into poverty.

The findings, among others, are detailed in a 357-page World Social Protection report out Tuesday (3 June) by the Geneva-based UN agency, the International Labour Organisation (ILO).

Dear EUobserver reader

Subscribe now for unrestricted access to EUobserver.

Sign up for 30 days' free trial, no obligation. Full subscription only 15 € / month or 150 € / year.

  1. Unlimited access on desktop and mobile
  2. All premium articles, analysis, commentary and investigations
  3. EUobserver archives

EUobserver is the only independent news media covering EU affairs in Brussels and all 28 member states.

♡ We value your support.

If you already have an account click here to login.

  • 6.6 million more people at risk of poverty or social exclusion today when compared to 2008 (Photo: EUobserver)

“The achievements of the European social model, which dramatically reduced poverty and promoted prosperity in the period following the Second World War, have been eroded by short-term adjustment reforms,” notes the report.

The report argues that fiscal consolidation meant to reduce debt has failed to stimulate the kind of economic growth needed to create jobs.

It notes that maintaining social protection not only reduces poverty but also stimulates growth by boosting the health of the vulnerable, increasing their productivity, and by extension props up domestic demand.

The report says that families in austerity-driven nations like Ireland, Cyprus, Greece, and Portugal have seen their disposable incomes plummet, leading to lower consumption.

In Greece, salaries dropped 35 percent since 2008 while unemployment increased by 28 percent. At the same time, social security reforms are being replaced with a system that limits the responsibility of the Greek state.

For comparison, the ILO estimates poverty rates in Finland in 2010 would have been over 30 percent, as opposed to around 7 percent, had the government slashed social protection transfers to those in need.

The ILO notes some structural reforms imposed on governments are designed to streamline administration.

But the emphasis, it says, has been disproportionally placed on the fiscal objective of balancing public budgets “without due consideration to the objective of adequate benefits to all people”.

Europe’s solution to the crisis for the past five years has instead given rise to persistent unemployment, lower wages and higher taxes.

All three have boosted poverty and social exclusion rates, which now affects some 123 million people or 24 percent of the EU population.

Before the start of the crisis in 2008, the figure was 116 million. Today, around 800,000 more children now live in poverty compared to five years ago.

“Some estimates foresee an additional 15-25 million people facing the prospect of living in poverty by 2025 if fiscal consolidation continues,” warns the ILO.

The European Commission, for its part, notes unemployment has increased to close to 26 million.

It says 5.3 million young people are jobless and around half of the unemployed have been without a job for more than a year.

“Although there are some signs of economic recovery, it remains slow; it is still very fragile; and it is uneven throughout the EU,” EU employment commissioner Laszlo Andor said Monday.

Andor says nearly a quarter of the population is still considered at risk of poverty or social exclusion.

EU warns France on budget efforts

France must take further action to cut its budget deficit to the EU's 3 percent limit in its upcoming emergency budget law, in a stark warning from the European Commission.

Inequality reduces economic growth, OECD says

Rising income inequality has cost European economies up to 10 percent in lost economic output over the past twenty years, according to a new report by the bloc's leading economic thinktank.

MEPs set out to give posted workers equal pay

A revision of the posted workers directive aims to make the single market fairer, but critics see efforts to root out "social dumping" as disguised protectionism.

Column / Health Matters

The yin and yang of Chinese medicine

Can traditional Chinese medicine help the modern European patient? Malta thinks so, in a new agreement with China.

Stakeholders' Highlights

  1. European Gaming & Betting Association60 Years Rome Treaty – 60 Years Building an Internal Market
  2. Malta EU 2017New EU Rules to Prevent Terrorism and Give More Rights to Victims Approved
  3. European Jewish Congress"Extremists Still Have Ability and Motivation to Murder in Europe" Says EJC President
  4. European Gaming & Betting AssociationAudiovisual Media Services Directive to Exclude Minors from Gambling Ads
  5. ILGA-EuropeTime for a Reality Check on International Day for the Elimination of Racial Discrimination
  6. UNICEFHuman Cost to Refugee and Migrant Children Mounts Up One Year After EU-Turkey Deal
  7. Malta EU 2017Council Adopts New Rules to Improve Safety of Medical Devices
  8. Nordic Council of MinistersNordic Energy Research: How to Reach 100 Percent Renewable Energy
  9. Party of European SocialistsWe Must Renew Europe for All Europeans
  10. MEP Tomáš ZdechovskýThe European Commission Has Failed in Its Fight Against Food Waste
  11. ILGA-EuropeEP Recognises Discrimination Faced by Trans & Intersex People
  12. Nordic Council of Ministers25 Nordic Bioeconomy Cases for Sustainable Change