A social earthquake in the making

DISCLAIMER: All opinions in this column reflect the views of the author(s), not of EURACTIV.COM Ltd.

In Europe, a deteriorating youth marginalization is creating the preconditions for a social earthquake capable of shaking the old continent and impairing the survival of the Euro, writes Edoardo Campanella, economic adviser at the Italian Senate.

"About a year ago the Arab spring taught the world an important, predictable lesson. When young people cease to be the engine of the economy and are excluded from the decision-making process, long-run economic growth is endangered and political stability undermined. This lesson holds true for dictatorial regimes as well as for long-established democracies.

In Europe, a deteriorating youth marginalization is creating the preconditions for a social earthquake capable of shaking the old continent and impairing the survival of the Euro. Until now, safety nets andintra-family transfers have prevented peaceful Indignados-style protests from turning into violent Arab-ones. However, the shortfall of resources due to a new imminent recession, along with fiscal austerity measures, will impair this channel, whereas frustration and social resentment will keep growing 

The figures are already alarming. According to a report recently released by the European Commission, one in five young people is at risk of falling into poverty or social exclusion, only one third of young people are employed, and one in three has been out of work for over one year. Moreover, 40 per cent of the unemployed are under 30, to the amount of 9 million people. On the other extreme of the age scale, the trend is reversed. The employment rate for people aged 60-64 increased from 23% in 2000 to 34% in 2010.

In peripheral countries the situation is extremely acute. The Portuguese government urged its young unemployed to leave Europe for better opportunities elsewhere, in Italy almost 120.000 young talents left the country last year, and in Spain thousands of people are pouring into former colonies in South America.

Across Europe, and even in Germany or Sweden, young workers are experiencing in-work poverty due to what economists call labour market dualism. Unlike their older colleagues, they just have access to temporary contracts, which pays on average 14%  less than permanent contracts and are more vulnerable to sudden layoffs.

The medium-term economic and social consequences of such youth marginalization are huge. First, an economy that is not nourished by fresh ideas loses competitiveness, becomes vulnerable to interest groups, suffocates material as well as intellectual progress, and is fated to stagnation or even prolonged recessions.

Second, high income volatility and job insecurity discourage the creation of new family units that are essential to generate social cohesion as well as intergenerational solidarity. Finally, economic uncertainty tends to lower fertility rates with negative spillovers on the size of tomorrow’s workforce, population ageing, and the sustainability of public finances. The political implications could even be more disastrous.

Therefore, what begs asking is whether these economic factors could contribute to the eruption of an Arab spring in Europe. There are, of course, huge economic and political differences between North Africa and Europe. The latter, unlike the former, is graying, prosperous, and democratic. But, paradoxically, the combination of these diverging demographic trends and opposite institutional features, along with the same aspiration for a better future, could lead to an identical result.

In North Africa young people represented the demographic majority of a despotic regimes, in Europe the political minority of a democratic system. The former fought for an economic progress they just started to savor but that was hampered by the elite in power. The latter would fight for a material wellbeing that is only benefiting their older fellow citizens at their expenses. Either way, young people can improve their situation and gain power only through violent rather than legal channels.

What event, if any, will inflame the upheaval in Europe, which country will be the epicenter of this social earthquake, and what impact it could have on the institutional, democratic order remain uncertain.

However, it is still possible to predict part of the effects. With people already questioning a model of society prone to generate inequalities, civil unrest in one country would rapidly spark political turmoil and social dissatisfaction across Europe. Foreign investors would fly away from Euro-denominated assets, scared by a spiral of riots, selective defaults, and low GDP that would eventually lead the Euro to collapse.

To avoid this catastrophe, European governments should start promoting the role of the youth in their societies through family friendly policies, career paths related to productivity rather than to seniority, cross-country mobility, and the eradication of dual labor markets.

Spring is approaching. European leaders should act soon.”

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