Struggling with low salaries, high unemployment and job insecurity, a majority of Europeans fear their troubles will only get worse, according to a recent report published by the Brussels-based Bruegel, a European think-tank specialising in economics.
The think-tank cited a Eurobarometer public opinion survey on the social impact of the crisis. A whopping 80% of Europeans believe poverty has increased over the past year, according to the findings of the survey which was conducted on behalf of the European Commission. In fact, after six years of recession, a third of respondents in Greece reported they have run out of money to pay for utilities, food and other daily consumer items. A similar situation was described by over 30% of respondents in Latvia, Lithuania, Bulgaria, Romania and Hungary.
The Eurobarometer survey no doubt paints a grim picture, but a deeper look at the situation is even more unsettling. This is based on the Severe Material Deprivation Rate – an indicator that assess poverty as the share of people who cannot afford at least four of these items: rent, mortgage or utility bills, heating, unexpected expenses, a meal of meat, chicken or fish every second day, one-week annual holiday away from home, a washing machine, colour television, telephone or a car.
According to this indicator, poverty varies widely across the 28-member European Union. For instance, Bulgaria has the highest rate (44.1%) and Luxembourg has the lowest (1.3%).
Other disparities can be seen between young and old. For instance, the Severe Material Deprivation Rate is 11.7% for youth (under 18) and only 7.5% for those over the age of 65.
As reported by Bruegel, whose membership includes EU governments, international corporations and institutions, this generational divide has increased since the start of the economic crisis.
“While the fall in severely materially deprived elderly people is a welcomed development, the adverse development for children is worrying,” Bruegel reports. “Looking at the unemployment rate, we observe an increase in all EU countries in the period 2007–2012 with the exception of Germany, while the rate remained practically unchanged in Austria, Malta, Finland and Poland.”
In 2007, the EU average unemployment rate stood at 7.2%. By the third quarter of 2013, this rate had increased to 10.9%. The countries with the lowest unemployment rates are Austria, Germany and Luxembourg, as opposed to Greece, Spain, Croatia, Cyprus and Portugal, where the rate is very high.
“Overall we note that there was an increase in the South-North divide in terms of unemployment, which has reached unacceptably high levels in several south European countries and leads to more polarisation across Europe,” reports Bruegel.
What is more, the percentage of people living in jobless households has increased significantly, especially in Ireland where one in five children in 2012 lived in a household where no one worked. The share of such children was higher than 15% in Bulgaria, the United Kingdom and Hungary.
Meanwhile, using the so-called Gini coefficient - the most commonly used measure of inequality, the highest levels of inequality in 2012 were registered in Latvia, Spain, Greece and Portugal. The lowest were reported in Slovenia, Czech Republic and Sweden.
According to Bruegel Director Guntram Wolff and Senior Fellow Zsolt Darvas, inequality in most advanced economies has been rising since the early 1980s and could be the reason for the pre-crisis increase in household debt and the consequent consumption squeeze during the crisis. As a result, the situation has undermined the citizens’ trust in the EU and their own governments.
This could devitalise the acceptability of painful structural reforms and fiscal consolidation measures and, in turn, diminish the reform momentum or even lead to political instability, according to Bruegel.
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