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Poor Europe

Christoph Hasselbach / sadJanuary 9, 2013

The European Commission has warned that eurozone countries are drifting apart: An ever-declining south is facing a relatively stable north. Governments are unable to protect household incomes.

Pedestrians walking past homless beggar at Athens' main Syntagma square
Image: AP

Europe is paying a high price for the ongoing economic crisis. Unemployment has risen to new highs and for those without a job, it is becoming increasingly difficult to find a new one. Ever more people are threatened with poverty.

These are some of the findings of a report published on Tuesday (08.01.2012) by the European Commission's office for Employment, Social Affairs and Inclusion headed by Laszlo Andor. Andor, in a press conference on the report, stated that "household incomes have declined and the risk of poverty or exclusion is constantly growing."

Yet not everyone has been equally affected. Young adults, unemployed women and single mothers are especially at risk of sliding into chronic poverty, Andor said.

When the crisis began, the Commission and EU member states had promised that the social system would absorb some of the shock and have a stabilizing effect. However, with sinking tax revenues and rising welfare payments, many countries simply lacked the financial leeway to protect household incomes from the results of the crisis, Andor said.

Woman gives alms to homeless in Madrid
Limits to the welfare state? Poverty in SpainImage: Getty Images

Austria and Spain - worlds apart

To simply discuss European averages, does not get to the root of the problem - perhaps most disturbing is how the EU, and especially the eurozone, is splitting into a relatively stable north and an ever-declining south.

Take unemployment, for example. According to current figures from the European statistical authority Eurostat, Austria is experiencing unemployment at a rate of about 4.5 percent - compared to 26.6 percent in Spain, Europe's jobless frontrunner.

The situation looks even bleaker for youth in Spain and Greece, where more than every one in two lacks work - illustrating the gulf between individual nations.

According to Andor, the problem lies in poor or lacking qualifications. "In some countries, notably in the Southern part of Europe, the match between skills and jobs is bad and/or has worsened," Andor stated at a press conference about the report's findings.

Many states are experiencing a vicious cycle of unemployment, shrinking tax revenues, sinking investment, and recession leading to ever more unemployment.

Yet, in contrast, household incomes have risen even during the crisis year of 2012 in countries like Germany, France and Poland.

German governing administration meeting over meal
In some Northern countries, like Germany, household incomes rose in 2012Image: dapd

Trying to prevent the 'Chinese model'

The commissioner sees in this developing divergence a disturbing new pattern. To resolve this, the commission is suggesting a skill-building offensive, labor market reforms and adjustments to social systems.

The European Social Fund would remain absolutely indispensible, especially in light of high unemployment levels. Introduction of a minimum wage could also help, so long as it didn't harm a country's competitiveness too much.

Patrick Itschert, deputy general secretary of the European Trade Union Confederation, told DW in an interview that he certainly has nothing against minimum wage and measures to improve workers' qualifications. But he slammed the commission's adherence to what he calls a "blind austerity policy."

"Labor market reforms don't create jobs," Itschert said. "Competition alone, on low wages, will bring the 'Chinese model' to Europe - and that's not what we want," he emphasized.

The confederation of unions has demanded, instead, a "Marshall Plan for Europe," in reference to the large-scale financial aid programme following World War II.

The growing social imbalance has been, until now, a blind spot in EU crisis policy.