Cause and Effect in European Politics and Law

Nothing Good on the Social Front

Zhaneta Kuyumdzhieva, trainee, October 18, 2012

Just a month ago, for the purpose of the conference “More Jobs for Europe”, summarised data about the social situation and employment rates in the EU were issued. All notifications that a new metamorphosis is already a fact are at place. After dealing a severe damage on the financial sector and on the economies of the member states, the new manifestation of the crisis is now hitting directly the European citizens and their households. In the end of September, the European Commission’s Employment and Social situation Quarterly Review of the second quarter of 2012 outlined dangerous divergence trends between the labour markets of the member states, a worsened social climate in 17 member states and a risk of wasting the potential of an entire generation of talented and creative young people who cannot find a job or work under insecure conditions with unclear perspectives.

The expert study defines the latter trend as “the most urgent social matter of our time”. Commission President Jose Manuel Barroso also mentioned it as an issue for consideration in his opening speech of the “Jobs for Europe” conference on 6 September 2012.

(un)Employment trends

The fact that unemployment continues to rise to a historical high of 25.3 million people (2.6 million more or +11% compared to March 2011) is particularly alarming. The rate of unemployed has grown in 17 member states. The long-term unemployed are 4.5% of the active population, up by 0.4% from the last year. In the first quarter of 2012, the biggest drop of full-time workers has been registered since the beginning of the financial crisis – 1.45 million per year - while the number of part-time workers rose with 590 000.

The biggest growth of the unemployment since July 2011 was registered in Spain (3.4%), Portugal and Cyprus (3.2%), Italy (2.5%) and Bulgaria (1.3%). In one year and a half, in the eurozone the decline of employment is 0.6% (915 000 people), EU-wide it is 0.2% (485 000 people). The lack of employment perspectives naturally leads to a decline in the economic activity. An ever growing number of young people neither work nor do they continue their education. In the first quarter of 2012 their number is 13.2% of the young people in working age. The volume of this category varies across the member states – its rate is the smallest in Netherlands and Luxembourg ( around 5%) and the biggest in Bulgaria, Italy and Romania (above 20%).

The youth unemployment has not manifested negative trends in the second quarter of 2012, but is one of the indicators that show deepening divergences between the member states. Its level is above 25% in 12 of the member states. Among the countries where its rate is the highest are Spain (52.9%), Slovakia (37.8%), Portugal (36.4%), Italy (35.3%), and Ireland (30.7%). In Bulgaria, the youth unemployment is 29.4%. Only three EU member states have a relatively low level of youth unemployment: Austria (8.9%), Germany (8.0%) and Netherlands (9.2%).

The polarisation of the labour markets among the member states is manifested also by the record 20.6 percentage points margin between the lowest level of unemployment in the EU (in Austria 4.5%) and the highest one (in Spain 25.1%). The indicators show that the effects of the crisis are different among citizens of different member states and have different impact on the labour market and the living standard. The results of a study on the household situation in the EU shows that the financial situation of almost half of the households has worsened. The trend is most visible in Cyprus, Slovakia, Italy and Belgium. On the other hand, the consumer polls about the financial situation of the households in the Czech Republic, Lithuania and Romania show an improvement.

EU’s social climate – in the negative scale

By July 2012, the Commission’s Review registers a 3-year drop of general confidence in the economy. As an additional tool to analyse the effect of the crisis, it presents a poll among 26 622 people above the age of 15 from all EU member states (around 1000 citizens per member state). They answer three groups of questions: assessment of the current situation, future forecasts (for the next 12 months) and a 5-year balance. The poll covers 15 topics linked to the satisfaction of the citizens with their lives and some concrete issues such as their work situation, the situation in their region, the financial situation of their households, the economic situation of their country, standards of living, quality of the public administration, employment situation, social protection, health- and social care systems.

Despite that, generally speaking, the Eurobarometer data show a relatively neutral attitude (an average index of -0.8 on a -10 to +10 scale) of the citizens toward the recession in Europe and despite that this attitude depends on geographic and socio-demographic factors, the attitudes in 17 member states still stand in the negative scale (between -0.4 and -5.8). The index varies across member states depending on their vulnerability from the crisis. It is high in Finland, Belgium, Luxembourg, the Netherlands, Sweden, Denmark, Austria and Germany. Adding to this group Malta and the UK, with a positive index of 0.1, we can identify the group of 10 member states where citizens are not totally discouraged by the crisis.

The other camp is of the “periphery” member states and those with adjustment programmes, whose economies suffered severely in the last couple of years. The social climate index in Greece has been falling every year since 2009 to register in the last year a particularly big drop of 1.2 points (from -4.6 in 2011 to -5.8 in 2012). The most drastic fall of the index is, however, registered in Italy – in just one year it dropped from -1.1 to -3.1. In Portugal and Spain – the other two countries severely hit by the crisis – the negative perceptions of the social processes have also increased by around 0.5 points, marking -2.1 in Portugal and -3.2 in Spain.

The anti-crisis approach of the EU

Recently, there was a meeting of the Employment and Social Affairs Council in Luxembourg that confirmed the conclusions from the April 2012 Employment Package. Employment Commissioner Laszlo Andor pointed out that the package recommendations must be rapidly implemented through the mechanisms of the European semester. The directions for action are several: jobs creation, recovery of the dynamics of the labour market and strengthening the governance of the employment and social partners’ co-operation policies.

In his speech from 6 September 2012 at the “Jobs for Europe” conference in Brussels, Commissioner Andor summarised the EU strategy to combat the worsening of the social environment in the following way: “The agenda for a job-rich recovery we have set out is about bringing together reforms and investments, connecting macro- and microeconomics and creating synergies between different policy fields. But most of all it’s about bringing people together. Social partners, national parliaments, companies, a number of different ministries, regional and local governments, EU institutions, labour market institutions – we all have to work together in order to put people to work and in that way generate a recovery in Europe.”. We can only hope that the team approach will produce results.