How much more social deterioration can the EU people endure?

EPSCO Council (Employment, Social Policy, Health and Consumer Affairs) meeting of 10/3/2014. From left to right: Algimanta Pabedinskiene, Lithuanian Minister for Social Security and Labour, Michel Sapin, French Minister for Labour, Employment, Professional Training and Social Dialogue (in the center), and Radoslaw Mleczko, Polish Deputy Minister of Labour and Social Policy. (The Council of the European Union Audiovisual Services, 10/3/2014).

The Council of the European Union responsible for Employment, Social Policy, Health and Consumer affairs couldn’t avoid recognizing that the social scenery in the EU is deteriorating fast as 26.8 million jobseekers unable to find a job and 25% of the European population at risk of poverty or social exclusion. Mind you that more than half of this percentage refers to people with a job, meaning that anything around 12.5% of the labour force are in danger of poverty or social exclusion despite the fact that they are not unemployed.

Unquestionably, this appalling social situation will be mirrored in the next EU election, after a few weeks. Then it will be transformed into political action during the next legislature. No wonder why the Brussels bureaucracy and the EU governments are under strong pressure to pass all the controversial legislation, like the European Banking Union within this legislature.

According to a press release issued by the abovementioned Council of the European Union “The crisis leaves behind the legacy of fragile growth, too little and often low quality jobs and more people exposed to poverty and social exclusion. The report on the Social Situation in the European Union and the scoreboard of employment and social indicators show that the social situation in the European Union is not improving while in some countries the situation is even worsening”.

Appalling deterioration

The problem is though that it’s not only the south of Eurozone where more than one third of the populations are in a desperate situation. In Germany 18% of the population is at risk of poverty and social exclusion, while in other North EU countries like Holland, Sweden and Finland, every day extreme political groups are attracting more voters and their appeal is on the rise.

Unfortunately, it seems that the present deterioration of the social situation in Europe is not the end of the tunnel. All the major economic institutions of the European Union, including the Commission and the European Central Bank predict anemic economic prospects. This means that this is not the end of the fall, and what is even more alarming is the end of it is not visible at all.

According to a Council press release a “2012 survey data indicate that… Since the adoption of Europe 2020 (framework) in 2010, there are 6,6 million more people living in poverty or social exclusion (an increase in more than 1/3 of Member States). In some Member States the annual growth of the relative poverty exceeds 2 percentage points. Rising material deprivation drives down living standards of significant parts of the population in some countries, and also this income inequality is growing across and within member states, particularly in the countries that witnessed the largest increases in unemployment”.

Destructive inequality

The key factor for the growing social deterioration in the above passage is the confirmation that income inequality is “growing across and within member states”. This is a direct recognition that the European Union is following the US example of fast growing income inequality. On top of that, for many European economists and not only, this inequality has become the driving power of growth. An impartial observer has to be blind not to see that those people are wrong on every account. Firstly, there is not real growth in the US nor in Europe and secondly if you subtract the massive subsidies handed to banks, in the range of hundreds of billions, then the real net value of the Western economic volume is falling.

In view of the total failure of this theory over inequality being a strong driver of growth, there is now a new movement going back to the good old 1960s. Again the fairer distribution of incomes is gradually gaining momentum as a real growth base, able to mobilize consumption and investments in the large western economies of the US and Eurozone.

Alas, it will take a long time and probably a politically dangerous experiment in Europe. It may take a lot of things in order for the European elites to change their minds and understand that in order to maintain their exceptional economic position, they have to let go of a large part of their wealth. The US political system can support and endure more inequality than Europe. A lot European countries may easily slide into right wing extremism if the present economic deterioration continues for some more years.