The recently published report on Employment and Social Developments in Europe 2012 reveals a sobering truth about the past year. Record unemployment, increasing poverty as well as a growing number of young people without education and a job are a burden on the Member States. At the same time, there are unprecedented social differences between the Member States. The European Commission gives a pessimistic forecast for 2013.
In its report, the European Commission's Directorate General Employment, Social Affairs and Inclusion provides an overview of the social situation in the European Union in 2012. 469 pages deal with long-term unemployment, growing poverty, social systems, taxes, wages and the discrepancies between job seekers' qualifications and employers’ requirements. Hence, the report of the European Commission illustrates the social effects of the crisis. “Due to high unemployment and a deteriorating social situation, 2012 was another very bad year for Europe”, commented the responsible EU Commissioner László Andor. The future will continue to look gloomy; it is unlikely that the socio-economic situation would improve in 2013.

26 million unemployed

Currently, 26 million people living in the EU are without a job; almost 19 million of these within the Eurozone. Hence, unemployment in the Eurozone has reached record heights. Particularly affected are South and Central European countries. Within the Eurozone, one can observe an ever increasing discrepancy between the number of job seekers in the North and South: the difference between the unemployment rates of the North and South states rose from 3.5 percentage points in 2008 to currently 7.5 percentage points. Hence, the gap within the Eurozone widened more than between those countries that are not part of the single currency. Youth unemployment in the euro area has also reached a worrying level of 24.4 percent. At 57.6 resp. 56.6 percent, Greece and Spain record the highest level of youth unemployment. In contrast, at 9 percent, Austria belongs to the countries with the lowest level of youth unemployment in Europe. Long-term unemployment too has risen significantly; being 10.6 % in the EU, compared to 7.1 % in 2008.

Risk of poverty on the increase

The rise in unemployment had resulted in an even greater risk of poverty. Most welfare systems were no longer able to protect household incomes against the effects of the crisis. Young people, single mothers and unemployed women were particular affected by poverty. The situation had become worse as in two thirds of the Member States the gross income of households had been reduced. Once again most affected were Greece, Spain, Cyprus, Estonia and Ireland. In order to counter this situation at least to a certain degree, Employment Commissioner Andor intends to introduce a Social Investment Package in 2013.

Time to take action

The experts of the study warn not to rely only on wage cuts to increase competitiveness. Such measures would have a longer lasting effect on purchasing power.

In order to tackle youth unemployment the Employment Commissioner demands the full implementation of the Youth Guarantee - which is based on the example of Austria - in all Member States. Apart from that, the study supports the introduction of minimum wages. Countries with minimum wages would have higher employment rates and the pay gap between men and women would not be as far apart. Another measure suggested in the report is the idea of a Europe-wide unemployment insurance. This would have an “automatic stabilising” effect, commented the authors.

Further information:

Report on Employment and Social Developments in Europe 2012