Brussels, 26/03/2013 (Agence Europe) - The conclusions of the latest European Commission Quarterly Review on employment and the social situation in the fourth quarter of 2012, adopted on Tuesday 26 March, are worrying - employment receded everywhere and unemployment continued to rise, while households' financial situation remained serious. “The adverse effects of public budget cuts and tax increases on employment and living standards are increasingly apparent in member states”, the Commission writes in a press release. It also emerges from the review that the net immigration rate from outside the EU has slowed down and that the crisis has had a negative impact on the birth rate.
In the opinion of European Commissioner for Employment, Social Affairs and Inclusion Laszlo Andor, “the social crisis in Europe keeps worsening and in a number of member states there is no tangible improvement in sight. The poorest have very often been the hardest-hit. Governments need to invest in order to find the way to inclusive growth and to give people a real chance to make a decent living - the Commission's recent Social Investment Package has highlighted ways to do this. But most of all we need more solidarity: within individual countries and also between them. We can only overcome this crisis if we stick together”.
Unemployment continued to rise in January 2013. 26.2 million people in the EU (19 million in the eurozone) - in other words 10.8% of the active population (11.9% of the eurozone population). - are no without work. The gap in unemployment between the south and the periphery, on the one hand, and the north of the Eurozone, on the other, reached the unprecedented rate of 10 percentage points in 2012. The EU's GDP shrank by 0.5% during the fourth quarter of 2012 - the largest contraction since early 2009. The total employment rate fell by 0.4% in 2012. In the fourth quarter of 2012 alone it fell by 0.2% compared to the previous quarter.
Social protection spending is falling faster than in previous economic crises. Budget tightening has had the direct effect of reducing the public sector workforce and the indirect effect of lowering aggregate macroeconomic demand. Changes to tax and benefits systems and cuts in public sector wages have led to significant reductions in the level of real household incomes and a worsening of living standards in low income households. Spending cuts and tax increases have impacted in the same way on high and low income groups. The analysis shows that careful design of budget reforms is crucial “to avoid the poorest being disproportionately affected, as was the case in a few countries (e.g. Estonia and Lithuania)”, the Commission writes. The proportion of households reporting financial distress remains well above levels observed at any time in the previous decade. Nearly one in four low income households is experiencing such a situation.
Social protection spending played a prominent role in compensating households' income losses at the beginning of the crisis and contributed to stabilising the economy. The impact of social protection spending declined in the middle of 2010 to become negligible in 2012, even in countries where unemployment kept rising. This reduction of social spending has been much stronger than in past recessions, which partly reflects the exceptional needs for budget consolidation in the context of the euro crisis. It neutralised the economic stabilisation function of social protection systems in the member states and may have contributed to aggravating the recession, at least in the short term, the Commission believes.
Youth unemployment reached a new peak in the EU as a whole (23.6% of active young people were without jobs in January 2013). In addition, 7.1% of young people had been jobless for more than one year in the third quarter of 2012, as opposed to 6.3% a year earlier. The growing proportion of young under 25-year-olds who are neither in employment nor in education and training (today accounting for roughly 8 million young people) is also very worrying.
The Quarterly Review also analyses the adverse effect of the crisis on fertility. Since 2009, the fertility indicator has stopped progressing and has stabilised at just under 1.6 children per woman in the EU27. The average age of women at childbirth has kept rising and has now reached 30 years old. Life expectancy continued to increase and has reached 77.4 years for men and 83.1 for women. Immigration from outside the EU has slowed since the 2007 peak. The EU27 nonetheless experienced a net arrival of immigrants of a half a million people, in other words the equivalent of one immigrant per 1,000 inhabitants. The number of citizenship acquisitions has increased to almost one million. The longer term challenges for the EU labour markets from a shrinking and ageing workforce must be far from under-estimated, the Commission concludes. (LC/transl.fl)