Critique of response to EU debt crisis highlights unemployment, widening poverty gap, and growing risk of social unrest
By Ian Traynor in Brussels
10 October 2013
@ The Guardian
Europe is sinking into a protracted period of deepening poverty, mass unemployment, social exclusion, greater inequality, and collective despair as a result of austerity policies adopted in response to the debt and currency crisis of the past four years, according to an extensive study being published on Thursday.
“Whilst other continents successfully reduce poverty, Europe adds to it,” says the 68-page report from the International Federation of Red Cross and Red Crescent Societies. “The long-term consequences of this crisis have yet to surface. The problems caused will be felt for decades even if the economy turns for the better in the near future … We wonder if we as a continent really understand what has hit us.”
The damning critique, obtained exclusively by the Guardian, of the policy response to the debt crisis that surfaced in Greece in late 2009 and raised fundamental questions about the viability of the euro single currency, foresees extremely gloomy prospects for tens of millions of Europeans.
Mass unemployment – especially among the young, 120 million Europeans living in or at risk of poverty – increased waves of illegal immigration clashing with rising xenophobia in the host countries, growing risks of social unrest and political instability estimated to be two to three times higher than most other parts of the world, greater levels of insecurity among the traditional middle classes – all combine to make a European future more uncertain than at any time in the postwar era.
“As the economic crisis has planted its roots, millions of Europeans live with insecurity, uncertain about what the future holds. This is one of the worst psychological states of mind for human beings. We see quiet desperation spreading among Europeans, resulting in depression, resignation and loss of hope. Compared to 2009, millions more find themselves queuing for food, unable to buy medicine nor access healthcare. Millions are without a job and many of those who still have work face difficulties to sustain their families due to insufficient wages and skyrocketing prices.
“Many from the middle class have spiralled down to poverty. The amount of people depending on Red Cross food distributions in 22 of the surveyed countries has increased by 75% between 2009 and 2012. More people are getting poor, the poor are getting poorer.”
The survey conducted in the first half of this year “mapped” the 28 countries of the EU plus a further 14 in the Balkans, eastern Europe and central Asia.
In the EU, it found that the grave impact of the crisis was not confined to the crisis-ravaged, bailed-out countries of southern Europe and Ireland, but extended to relative European success stories such as Germany and parts of Scandinavia.
Last year the Spanish Red Cross launched a national appeal to help people in Spain, the first ever. Suicides among women in Greece have at least doubled. Many employed in Slovenia have not been paid for months. In France 350,000 people fell below the poverty line from 2008 to 2011. One in five Finns born in 1987 have been treated for psychiatric or mental disorders, associated with the economic slump in Finland in the 1990s.
Despite Germany’s vaunted success in avoiding the high levels of unemployment prevalent across much of the EU, a quarter of the country’s employed are classified as low-wage earners, almost half of new job contracts since 2008 have been low-paid, flexible, part-time so-called mini-jobs with little security and usually no social benefits. In July last year 600,000 employed in Germany with social insurance did not have enough to live on.
The problems are also affecting Europe’s wealthiest societies, such as Denmark and Luxembourg, the study found.
In the Baltic states and Hungary up to 13% of the populations have left in recent years due to economic hardship. The study reports a mounting trend of intra-European migration, mainly from east to west, in search of work.
The jobs crisis is one of the most debilitating issues facing the EU and the eurozone. Of more than 26 million unemployed in the EU, those out of work for longer than a year stands at 11 million, almost double the level of five years ago when the international financial crisis broke out in the US.
The social impact is immense, the study found. In Greece and Spain adult children with families are moving back in with their parents, several generations are living in single households with one breadwinner between them. It is now a common sight to find formerly prosperous middle-class men and women sleeping rough in Milan, Italy’s financial capital.
Youth unemployment figures in a quarter of the countries surveyed ranged from 33% to more than 60%. But as destructive to families, the report said, is the soaring jobless levels among 50-64 year-olds which has risen from 2.8 million to 4.6 million in the EU between 2008 and 2012.
“The rate at which unemployment figures have risen in the past 24 months alone is an indication that the crisis is deepening, with severe personal costs as a consequence, and possible unrest and extremism as a risk. Combined with increasing living costs, this is a dangerous combination,” the study said.
Despite the perceived success of Germany, Europe’s economic engine, the study takes the EU’s biggest country to illustrate the widening wealth gap, raising questions about the longevity of the EU’s traditional model, the social market economy. According to Germany’s Bertelsmann Foundation some 5.5 million Germans have lost their middle-class social status over the past decade and fallen into the ranks of low-income earners while at the same time half a million others made the grade as high-income earners.