Crisis-hit Europeans battling financial distress: EU report

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Facing mounting social pressures and unemployment, Europeans are experiencing their worst financial distress in a decade and see little immediate hope for improvement, a new study says.

The overall social situation further deteriorated in the EU over the fourth quarter of 2012, according to the EU Employment and Social Situation Quarterly Review, published yesterday (26 March).

The share of the EU population reporting their households are experiencing financial distress remains well above levels observed at any time in the previous decade, the report showed, affecting almost one-in-four households. Also, the share of people running into debt continues to rise steadily.

"The adverse effects of public budget cuts and tax increases on employment and living standards are increasingly apparent" in some member states, the report says.

"The social crisis in Europe keeps worsening and in a number of member states there is no tangible improvement in sight," EU Employment and Social Affairs Commissioner László Andor said in a statement.

Andor was not present at the presentation of the report. His spokesman, Jonathan Todd, said the 85-page document was “not easy reading”.

Crisis getting worse

According to the report, unemployment rose further during the quarter, to 26.2 million in the EU and 19 million in the eurozone. It now accounts for 10.8% of the active population, and 11.9% in the euro area. The increase over the last year has been more pronounced in the euro area (+1.1 percentage points) than in the EU (+0.7 points).

The previous report, covering the third quarter of 2012, showed that unemployment had reached a 20-year high and that the number of unemployed had broken the 26-million mark.

EU GDP dropped by 0.5% during the fourth quarter of 2012, the largest contraction since early 2009. Among larger states, the economy continued to grow in Germany, Poland and the United Kingdom, whereas it shrank in Italy, Spain and France.

Over the last year the increase in financial distress has been particularly sharp in Italy and also relatively strong in Bulgaria, Cyprus, Greece, Ireland, Portugal and Spain.

New record in youth unemployment

Youth joblessness hit a peak, rising 1.2 percentage points over the year to 23.6% in January 2013. The figures ranged from 15% or less in Austria, Denmark, Germany and the Netherlands, to more than 55% in Greece and Spain.

“This underlines the need of the member states to put in place the Youth Guarantee as soon as possible, with the support of the Youth employment initiative and the social fund,” Todd said.

The report also found that the number of young people who are neither working nor in school rose. Migrants also facing rising employment challenges.

Bulgaria

The report says the risk of social exclusion is by far the highest in Bulgaria.

It has the lowest average salary in the EU, €393 and 22% of the labour force earns the minimum wage, €159.

Almost half of the Bulgarians (44%) experienced “severe material deprivation in 2011”, the highest percentage in the EU, which is five times higher than the EU average.

The report also takes note of demonstrations over electricity bills and other economic conditions that led to the resignation of Boyko Borissov as prime minister in February. Seven protestors set themselves on fire, and four died.

In the Employment Package adopted in April 2012, the European Commission proposed a new approach for employment policy, advancing a jobs-centred paradigm where labour is a most precious resource and productive employment a source of growth, rather than a delayed consequence of the recovery.

At the June 2012 European Council, EU heads of state and government adopted a €120-billion 'Compact for growth and jobs'.

The Compact puts an emphasis on both tackling unemployment and addressing the social consequences of the crisis, referring to sections in the Employment Package on quality job-creation, structural reform towards dynamic labour markets, investment in human capital and improving multilateral surveillance of employment policies.

At the last EU summit on 14-15 March, EU leaders pushed for the implementation of measures adopted at the June Council.

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