EU regional differences betray an unjust arrangement

Johannes Hahn, Member of the EC in charge of Regional Policy, went to Saint Malo to participate in the 41th General Assembly and the 40th anniversary of the Conference of Peripheral and Maritime regions (CRPM) of Europe. (EC Audiovisual Services, 26/09/2013).

Predictably, regional statistics on employment, incomes and the risk of poverty could mirror in a more accurate way, how the economic crisis has affected the more deprived and the moret affluent regions of the European Union. National averages can serve well the comparative analysis between EU’s member states. Regional data however would go deeper in this respect and serve as the magnifying glass of the differences between the haves and the have-nots. To serve this purpose Eurostat, the statistical service of the European Union, produced its 2013 regional yearbook offering a more detailed view of the EU through regional statistics.

Labour market developments

Starting from the labour market situation Eurostat found that the worst hit regions belong to south Europe and the eight ex eastern bloc countries. Among the 43 regions where the employment rate decreased by five percentage points or more between 2008 and 2011, “15 were in Spain, nine in Greece, six in Bulgaria, three in Portugal, both regions of Ireland, both regions of Croatia, two in Romania, one in France as well as Estonia, Latvia and Lithuania. Among the 36 regions which had an increase in their employment rate of more than one percentage point during the same period, 25 were in Germany, three each in France and Poland , two in Romania , one in the United Kingdom as well as Malta and Luxembourg”.

With very rare exeptions, developments in the labour market were predictable. The over-indebtedness crisis hit and the low-income countries had the worst record of unemployment during the past five years, while the core EU nations didn’t pay any price at all. What was not expected however is that the number of regions with large unemployment and employment increases are comparable, 43 to 36. This is a revelation because one may think that Germany profited from the woes of others.

It wasn’t only the exports to China that supported the increase of employment in the 25 German regions during the 2008-2011 four-year period. Internal market has greatly helped this country to ‘steal’ jobs from the rest of EU regions, through its made easy intra EU exports. The level playing field the EU has created for the German industrial products has deprived the less competitive EU countries from their traditional defences, in the borders and within the borders.

Now the rest of the EU is quite defenceless vis-à-vis the Teutonic productivity, which is propelled by the federal government’s formidable ability for national economic planning. In a Germanic way the country’s society follows without difficulty the central authority when it plans and imposes for example a five-year zero salary and wages increases. This is what has happened during the past few years, having greatly increased Germany’s competitiveness.

Poverty follows unemployment

After having discussed the employment-unemployment developments in EU’s regions it is ease to predict which parts of the EU are more at risk of poverty. According to Eurostat, “In the EU28 in 2011, 29% of the population in thinly populated areas were at risk of poverty or social exclusion, compared with 23% in densely populated areas and 21% in intermediate density areas. In seventeen Member States (most of them located in Eastern and Southern Europe), the thinly populated areas had the highest at -risk-of-poverty or social exclusion rates, in eight Member States (mainly in Western Europe), it was the densely populated areas and in three Member States the intermediate density areas”.

From this Eurostat quote it becomes obvious that the risk of poverty and the population density are closely and inversely related. It is exactly the same patent that unemployment follows. It’s not then by chance that Western Europe is very densely populated, while the south and the east are more scarcely inhabited. It is as if unemployment and poverty risks pick along the wide geographical corridor which starts from the north-east corner of the EU then comes southwards down to the Mediterranean and then goes westwards following the south coast of the old continent.

It is as if the core EU countries of Western Europe having a back yard, to insulate them from the south-eastern winds. The good thing is that those ‘two parts’ are inseparable.