Reuters: Families Prop Up Failing State Pensions in South EU

A recent Reuters article reports on how the financial crisis is affecting state pension and welfare systems in southern EU member-states. “Greece is the only country to have taken drastic action, forced to cut pensions by 30 percent between 2009 and 2013 under the terms of its international bailouts,” the news agency mentions, arguing that rising youth unemployment across the southern member-states requires reforms be made to rebalance Europe’s welfare systems, making them affordable and socially just. Reuters also reports that in much of southern Europe, pensions have been the most stable type of income during the past five years of economic hardship. At the same time, incomes of people aged between 30 and 44, the biggest group in the working-age population, fell 2.8 percent as millions lost their jobs or took wage cuts. “As today’s young are more likely than in the past to suffer unemployment or under-employment through their careers, their pensions will be lower. This means eventually they won’t be able to cushion their own children financially.” At which point, says Alessandro Gentile, a professor of sociology at the University of Zaragoza, interviewed by Reuters, “the model of family solidarity ‘will short-circuit’.” “With so many Europeans unemployed, there are not enough well-paid workers paying into the system to fund it properly,” Reuters notes. According to figures by the Organization for Economic Cooperation and Development (OECD), southern European states, like Greece, Spain and Italy, compensate for the losses of insurance companies by cutting down on other welfare services, such as universal unemployment benefits or care for infants and the elderly. “Yet in most cases, the planned reforms don’t take full effect until 2030 or even later. With pensioners forming an important voting bloc, this reflects political resistance to faster change,” the article said.

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