EU’s social crisis and unemployment to deteriorate

They are all ready for work

During the 9th European Regional Meeting of the International Labour Office (ILO), which currently takes place in Oslo from 8–11 April, a study was presented showing that in the European Union the risks of social unrest have exploded over the past few years growing with the highest tempos in the world. Obviously this is a direct result of the constantly rising unemployment levels in almost all EU countries.

Increasing social unrest

According to the latest estimates prepared by the ILO especially for the purposes of the 9th European Regional Meeting, “the risk of social unrest in the EU was 12 percentage points higher than before the start of the global crisis. Compared with other major regions, the EU has registered the most significant aggravation in the risk of social unrest. Between 2010 and 2012, the countries that experienced the sharpest increases in the risk of social unrest are Cyprus, Czech Republic, Greece, Italy, Portugal, Slovenia and Spain. The risk of social unrest declined in Belgium, Germany, Finland, Slovak Republic and Sweden”.

      Changes in the risk of social unrest between 2006-2007 and 2011-2012

Note: The scale of the index goes from 0 per cent to 100 per cent, with 100 per cent being the highest risk of social unrest. The graph refers to the percentage points increase or decrease in the risk of social unrest. The bars refer to simple averages across regions.
Source: IILS calculations based on Gallup World Poll Data, 2013.
The risk of social unrest is a composite indicator estimated by the Institute on the basis of survey data covering several dimensions of people’s perception of their lives. These dimensions include, in particular, confidence in government, perceptions regarding whether living standards are improving or not, and people’s assessment regarding the state of the labour market (see ILO, World of Work Report 2012). The estimated risk of social unrest is therefore qualitative in nature. Importantly, evidence suggests that changes in the risk of social unrest –as estimated— are strongly associated with changes in unemployment rates and in income inequality (as measured by the Gini coefficient). By contrast, changes in the risk of social unrest are weakly associated with fluctuations in economic growth.

ILO a unique forum

The ILO is the only tripartite United Nations agency with government, employer, and worker representatives. This tripartite composition makes the ILO a unique forum in which the governments and the social partners of the economy of its 185 Member States can freely and openly debate and elaborate labour standards and policies.

The ILO has set as its own mission and objectives to promote “social justice and internationally recognized human and labour rights, pursuing its founding mission that labour peace is essential to prosperity. Today, the ILO helps advance the creation of decent work and the economic and working conditions that give working people and business people a stake in lasting peace, prosperity and progress. Its tripartite structure provides a unique platform for promoting decent work for all women and men. Its main aims are to promote rights at work, encourage decent employment opportunities, enhance social protection and strengthen dialogue on work-related issues”.

This 9th European meeting of ILO is devoted to European Union’s employment and social problems. Addressing the opening conference yesterday, Norway’s Prime Minister Jens Stoltenberg said, “The crisis in Europe is dramatic. A financial crisis has turned into a jobs crisis. In some countries there is now a lost generation of young people; out of a job, out of training and out of the market. More people are becoming permanently inactive and unemployable”. This dramatic tone is hundred per cent justified if one follows closely the news from the streets of Athens, Madrid, Lisbon, Rome and other major EU cities and during the past two weeks from Nicosia in Cyprus.

It was even more alarming however to hear that this is not the bottom of the employment and social crisis that the European Union is in. EU dignitaries use to underestimate in public the dangers that are threatening the Union.  The ILO Director-General Guy Ryder however didn’t chew his words. He said that as “Eurozone unemployment hit a historic high at 12 percent, the figure despite being very disturbing, it was not surprising and would probably get worse unless more was done to put in place policies to promote employment”. He went on to say that “youth unemployment figures are “absolutely catastrophic” at over 50 percent and the governments have to do more to get the austerity balance right”.

Always looking for a job

Coming back to the special report on the employment and social situation in the European Union the ILO writers observe that “Given the limited number of jobs created in the present context (in the EU), jobseekers find it increasingly difficult to obtain employment. As a result, long-term unemployment (jobseekers without work for more than one year) is on the rise. As of the third quarter of 2012, there were 11 million long-term unemployed in the EU. This is 1.3 million more than the year before and 5.2 million more than in 2008. In most EU countries, more than 40 per cent of the unemployed are without work for more than one year. Since 2008, Estonia, Ireland, Lithuania and Spain recorded the largest increases in long-term unemployment”.

It is only natural then that many jobseekers have become discouraged and have stopped looking for work. According to the ILO report in most EU countries, the number of discouraged workers – those who are “inactive” but would like to work – rose by 29 per cent, on average, between 2008 and 2011. The dreadful conclusion is that nearly 6 million jobs are missing in the EU to return to the pre-crisis employment situation.

Woe to the young

As for youth unemployment in the EU it has reached alarming levels. In February 2013, the youth unemployment rate in the EU stood at 23.5 per cent – with rates as high as 58.4 and 55.7 per cent in Greece and Spain, respectively. Only in Germany has youth unemployment declined since 2008. Worryingly, almost 30 per cent of all youths in the EU were at risk of poverty or social exclusion in 2011.

The problem is that, as Ryder said, all those alarming numbers did not come as a surprise and even worse this tendency doesn’t seem to have reached the bottom of the curve. It is also true that the prevailing economic policy philosophy does not offer the needed tools to reverse the dangerous trends. It is as if the European policy makers are currently trying to find the society’s breaking point in various member states.

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