The EU Commission openly repudiates the austere economic policies

László Andor (on the right), member of the European Commission in charge of Employment, Social Affairs and Inclusion, went to Britain to visit the project "Streetvibes Youth" in Eltham, South East London, funded by the European Social Funds. Reportedly all the people in this photograph, except the Commissioner, don’t have a full-time job. (EC Audiovisual Services, 16/05/2014).

László Andor (on the left), member of the European Commission in charge of Employment, Social Affairs and Inclusion, went to Britain to visit the project “Streetvibes Youth” in Eltham, South East London, funded by the European Social Funds. Reportedly all the people in this photograph, except the Commissioner, don’t have a full-time job. (EC Audiovisual Services, 16/05/2014).

László Andor, Commissioner for Employment, Social Affairs and Inclusion while delivering the opening address at the conference on Social policy innovation yesterday in Brussels, must have known that Eurostat, the EU statistical service, was to announce almost simultaneously that the rate of employment of people aged 20-64 fell to 68.3% in 2013, for a fifth year in a row. This stands against a ‘Europe 2020 Strategy’ target of 75%. Andor said that “We need to realise that we are not meeting these targets (Europe 2020 Strategy); on the contrary, the poverty situation is the most striking: the number of people at risk of poverty or exclusion has risen by 6.6 million. In 2012, 123 million Europeans were living in poverty or facing the risk of social exclusion”.

Despite the rhetoric that the European Union has exited from the 2008 financial crisis, aka banking melt down, Andor recognizes loudly that from 2008 onwards the rate of employment for people aged 20-64 falls continuously, while poverty and social exclusion range free. This percentage had reached its all-time high point at 70.3% in 2008. According to Eurostat, in the year 2009 this variable fell to 68.9%, in 2010 to 68.5%, in 2011 to 68.5%, in 2012 to 68.4% and last year it bottomed with 68.3%. Understandably, the situation was much worse in the south. In Greece only 53.2% of people aged 20-65 had a job in 2013, in Spain 58.2% and in Italy 59.8%.

Europe doesn’t make it

Obviously the open secret is that for as long as the EU economy will be receding or stagnating, the rate of employment will continue shrinking, probably marginally, but always moving away from the 2020 target of 75%. All that in a background of austere economic policies, which roughly means that everybody should do it like Germany. Not the slightest state budget deficits, not the slightest use of monetary policy for growth are allowed. Salvation will come from hard work and tightened belts.

Berlin insists on this strategy and makes sure it applies all over the EU, using the increased political leverage Germany has acquired during the past few years. Germany produced a zero state budget deficit in 2013, and didn’t even use the small inflation allowance of around 1.1% of the GDP. A budget gap equal to the inflation rate is considered as sustainable in the long-term. Understandably Berlin doesn’t even believe in this basic principle and the absurd Teutonic economic theorizing goes as far as targeting a zero inflation rate.

Austerity doesn’t work

This is a real economic trap as reality gradually proves. The German central bank, the powerful Bundesbank, is reportedly now predicting that Germany’s already weak growth will further decelerate over the next months. The reason is that Germany’s growth is based on exports and the international environment is no longer positive. The problems in the developing world and the Ukrainian issue in Europe will cast their shadow on German exports.

It’s a time cherished economic rule that a large and developed economy cannot indefinitely count only on exports for its well-being. Japan is a characteristic case of that. Internal demand can be an equally reliable as a long-term base for growth. There are also political hurdles to a heavily relying on foreign sales economy. The US for example is increasingly using the strong argument of the excessively positive for Germany bilateral trade. What Washington says in reality is that Germany cannot go on ‘stealing’ the growth potential of others, by continuously increasing its exports to trading partners. According to the Americans, Germany has to increase its internal demand and let the Eurozone use more effective monetary tools for growth, abandoning the austere strategy. Those grievances seem to be clearly seen in delays that plague the negotiations for a new era in the EU-US trade, the famous Transatlantic Free Trade Agreement (TTIP).

A message from Greece

The internal austerity and the increased reliance on exports seem to work even less effectively in the south of Europe. The results of the 22-25 May European elections will be a reliable witness of that. Already Greece produced some first signs. Last Sunday Greece held the first round of municipal and regional elections. The fascist group Golden Dawn won almost 10% of the votes in the capital region of Attica, home to almost half of the country’s population. A GD candidate for major of Athens got 16.12% of the vote. In the disadvantaged Athens suburbs of Academia Platonos, Sepolia and Kolonos this person ended first, scoring 20.7% of votes.

Undoubtedly, the social and the political structures in many European Union countries are already overstretched. The austere recipe for economic growth doesn’t seem to work, despite the fact that one after the other the crisis hit countries (Ireland, Portugal, Spain and Greece) are exiting from the EU-ECB-IMF assistance programs, and become financially self-sustained. Unfortunately, the austerity recipe followed all over Europe, holds down growth even in the surplus countries. The weak internal demand in Germany doesn’t help at all Greece, Italy and Spain to start growing again.

Hopefully, a strong message from this European election will change all that, and urge Germany to live up to its role as leading Eurozone economy.

 

the sting Milestone

Featured Stings

Can we feed everyone without unleashing disaster? Read on

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

Stopping antimicrobial resistance would cost just USD 2 per person a year

Health Education, is it a necessity?

From coca to cocoa: three lessons from Peru on how farmers can leave the drug trade behind

European Globalisation Adjustment Fund, who gets it and who pays the bill?

Dozens killed and injured by new airstrikes in western Yemen, UN coordinator condemns ‘outrageous’ toll

China Unlimited and the Chinese dream

Youth employment crisis easing but far from over

The Europe we want: Just, Sustainable, Democratic and Inclusive

Investing in rural women and girls, ‘essential’ for everyone’s future: UN chief

Further reforms in France can drive growth, improve public finances and boost social cohesion

Mental distress during the pandemic: is there a way out?

What has changed in the French politico-economic horizon

Everyone has ‘a moral imperative’ to uphold the rights of persons with disabilities, says UN chief

This entrepreneur built an island resort out of plastic waste

EU Parliament approves CETA: the EU-Canada free trade deal sees the light in Trump’s gloomy era

Civilian death toll continues to mount in Syria, UN relief chief tells Security Council

Fears for food security and the future of farming families, as Fall Armyworm spreads to Asia

Bacteria vs. humans: how to fight in this world war?

World’s human rights watchdog spotlights Afghanistan, Yemen and 12 others: Here’s the scoop

Draghi keeps the euro cheap, helps debt refinancing, recapitalization of banks and growth

Why we need a Paris Agreement for nature

How blockchain can cut the cost of new medicine

Madagascar: UN chief commends leaders, State institutions following ‘historic milestone’ election

If on a summer’s night: is UK businesses’ “new deal” the only key to the “best of all worlds”?

Soil erosion must be stopped ‘to save our future’, says UN agriculture agency

Europe’s forests are booming. Here’s why.

Batteries included: how better storage can transform renewable energy

Replacement for United States on Human Rights Council to be elected ‘as soon as possible’

MEPs back first EU management plan for fish stocks in the Western Mediterranean

Why COVID-19 could mean a new dawn for Nigeria’s manufacturing sector

Eurostat: Real unemployment double than the official rate

A major win for transgender rights: UN health agency drops ‘gender identity disorder’, as official diagnosis

Lessons from the Global Entrepreneurship Index

Jean-Claude Juncker and Theresa May at last week’s EU Council. Source: EC Audiovisual Services / Copyright: European Union, 2017 / Photo: Etienne Ansotte

EU leaders open “Phase Two” of Brexit talks and warn Theresa May of tougher times

This is how AI can help you make sense of the world

Boosting adult learning essential to help people adapt to future of work

Will the European Court of Justice change data privacy laws to tackle terrorism?

How can we produce enough protein to feed 10 billion people?

Greenhouse gas emissions have already peaked in 30 major cities

Commission presents EU-Vietnam trade and investment agreements for signature and conclusion

Improving Italy’s capital market will boost growth opportunities for Italian companies and savers

‘Uphold human dignity’, dismantle ‘specious notion of racial superiority’ urges UN chief

The company of the future must do well by doing good

UN chief hails victory of ‘political will’ in historic Republic of North Macedonia accord

Towards a climate-neutral Europe: EU invests over €10bn in innovative clean technologies

‘Crippling to our credibility’ that number of women peacekeepers is so low: UN chief

Afghanistan: top UN official denounces ‘extreme’ suffering of civilians in Ghazni

This is how countries compare on gun deaths

Commission Work Programme 2019: Delivering on promises and preparing for the future

Sri Lankan authorities must work ‘vigorously’ to ease simmering ethno-religious tensions, urges UN rights expert

UNcomplicating the UN: a new podcast is born over coffee in New York

Stronger European Border and Coast Guard to secure EU’s borders

Commission paralysed before the banking leviathan

Malta: investigation risks being compromised while Prime Minister is in office

Industrial products: Lifting the last impediments in the EU single market

Is South Korea set to lose from its FTA with the EU?

Berlin cannot dictate anymore the terms for the enactment of the European Banking Union

Half of Eurozone in deflation expecting salvation from monetary measures

US life expectancy is falling – here’s why

Why business schools can’t “return to normal” after the COVID-19 pandemic

More women and girls needed in the sciences to solve world’s biggest challenges

More Stings?

Advertising

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s