The potential for social unrest in European Union countries is higher than anywhere else in the world and the already yawning gaps between rich and poor, a major trigger, are likely to widen globally, the International Labour Organisation said on Monday (3 June).
In its annual World of Work Report, the ILO said social unrest – strikes, work stoppages, street protests and demonstrations – had increased in most countries since the economic and financial crisis that began in 2008.
But the risk, it said, "is highest among the EU-27 countries – it increased from 34% in 2006-07 to 46% in 2011-2012." However, the risk was not evenly spread and had not grown in at least seven of the member states.
However the risk of social unrest had declined in Belgium, Germany, Finland, Slovakia and Sweden since 2010.
Overall, the risk of unrest in the EU "is likely to be due to the policy responses to the ongoing sovereign debt crisis and their impact on people's lives and perceptions of well-being," the United Nations agency said.
"This bleak economic scenario has created a fragile social environment as fewer people see opportunities for obtaining a good job and improving their standard of living."
The risk of social unrest had also risen in Russia and non-EU countries of the former communist bloc, as well as in South Asia and in advanced economies outside the EU.
But it had declined in Latin America and the Caribbean, where governments had followed employment-boosting policies, in the growing economies of sub-Saharan Africa and in East and in South-East Asia and the Pacific.
Growing wealth gap
The ILO said it based its findings on correlating economic growth and income levels with inflation, unemployment, debt as a share of economic output or GDP, and income inequality – all factors which influence levels of social tension.
Government austerity policies of the last few years had been accompanied since 2010 by increasing wage inequalities in which middle-income groups' revenues declined and those of top salary earners began to grow again, it declared.
Across the richer countries, profit margins for larger companies were rising, as reflected in booming stock markets, and were now at levels similar to those of the immediate pre-crisis years, the ILO said.
"But rather than putting these profits to work through productive investment in the real economy, increased revenues have more often been channelled towards higher cash holdings," the agency said.
5.2 million jobs needed in Europe
Global unemployment rates were also expected to rise, the report said. In the EU and other developed countries the real employment rate, taking into account the growth in the working-age population, was unlikely to recover until 2018 to the level at which it stood before the crisis.
In Europe, the deteriorating situation on the unemployment front is of particular worry to the ILO. Unemployment has reached a new high in the euro zone, reaching 12.2% in April, according to Eurostat.
Only seven EU states (Austria, Germany, Hungary, Luxembourg, Malta, Poland and Romania) have surpassed pre-crisis employment rates, the ILO said. Those most vulnerable, the report said, were Cyprus, Czech Republic, Greece, Italy, Portugal, Slovenia and Spain, where the employment rate are below 2007 levels.
“In other words, 5.2 million jobs are needed to restore employment rates to their pre-crisis levels,” the ILO said in a briefing note on the European Union.
Worse, long-term unemployment is increasing and jobseekers are becoming discouraged, according to the ILO’s analysis. “As of the fourth quarter of 2012, there were 11.7 million long-term unemployed in the EU. This is 1.4 million more than the year before and 5.7 million more than in 2008.”
For Europe, the ILO report recommends a job-friendly approach to restart economic growth that serves both macroeconomic and employment goals.
“This means addressing the structural vulnerabilities behind the crisis, such as the systemic issues in the financial sector”, as well as “unlocking the credit flow to productive enterprises so that they can stimulate growth.”
The report praised “well-designed labour market programmes” such as subsidised wages and tax breaks in Germany and Belgium as helping to promote a job-friendly recovery. It also highlighted measures to prevent education drop out and training opportunities, including youth guarantee schemes which offers young people the possibility to return to education after an unsuccessful job search.
Unemployment has reached a new high in the eurozone, reaching 12.2% in April 2013, according to Eurostat.
The deepening unemployment crisis is a threat to the social fabric of the eurozone. Almost two-thirds of young Greeks are unable to find work, exemplifying southern Europe's 'lost generation'.
Economists and policymakers including Germany's finance minister, Wolfgang Schäuble, have said the greatest menace to the unity of the eurozone is now social breakdown from the crisis, rather than market-driven factors.
In France, Europe's second largest economy, the number of jobless rose to a record in April, while in Italy, the unemployment rate hit its highest level in at least 36 years, with 40% of young people out of work.
International Labour Organisation (ILO)
- World of work report 2013 | Full report | Executive summary (3 June 2013)
- World of work report 2013: European Union snapshot
- Reuters: Record unemployment, low inflation underline Europe's pain
- New York Times: The E.U.’s Feeble War on Unemployment