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

This is how much people would pay to use some of the world’s most popular apps

Why the UN is investigating poverty in the United Kingdom

THE COMMITTEES: ‘All roads lead to the Fifth’

EU migration deal welcomed by UN agencies

World Maritime Day: Commissioner Vălean calls for support and safe return of seafarers

To solve the climate crisis, we need an investment revolution

Eurozone economy desperately needs internally driven growth

Autonomous vehicles could clog city centres: a lesson from Boston

“Decent working conditions for the young health workforce: what are the challenges and can we find solutions?”

“A global threat lies ahead worsened after the EU’s green light to the Bayer-Monsanto merger”, a Sting Exclusive by the President of Slow Food

Brexit poses ‘particular risk’ to British people in poverty: UN independent expert

A digital tax sounds like a great idea. Here’s why it might not be universally popular

5 ways urban transport could step up a gear for women

Drugs cost too much. There is a better way to fund medical innovation

Boris ‘single-handed’ threatens mainland Europe; can he afford a no-deal Brexit?

Tragedy of Mediterranean deaths continues, as seven drown, 57 rescued: UN migration agency

Act now to end violence, Zeid urges Nicaraguan authorities

A Sting Exclusive: “Cybersecurity: Why consumer products must be looked at urgently”, by BEUC’s Deputy Director General

Banks promise easing of credit conditions in support of the real economy

DR Congo: ‘New waves of violence’ likely, UN warns, unless State acts to prevent intercommunal reprisals

Ebola: EU announces new funds to strengthen preparedness in Burundi

Victims of terrorism remembered

Varna (Bulgaria) awarded European Youth Capital 2017

The European Sting @ Mobile World Congress 2014, Creating What’s Next for the World. Can EU Policy follow?

ECB’s billions fortify south Eurozone except Greece; everybody rushes to invest in euro area bonds zeroing their yields

People, not technology, shape the future of manufacturing

Parliament in favour of lifting visa requirements for Kosovars

Africa Forum aims to boost business, reduce costs, help countries trade out of poverty

EU and Australia launch talks for a broad trade agreement

The horrific trend of the anti-vaccine movement in Turkey

FROM THE FIELD: Going the extra mile with vaccines

Luxembourg has achieved high levels of growth and well-being but must do more to preserve and share prosperity

Reducing deforestation means getting serious about environmental crime

Entrepreneurship and strategic planning: the enabler

4 simple ways to make your holiday season more sustainable

Yanukovych attempts a violent and deadly cleansing of Kiev’s center

‘Revved up climate action’ needed to counter ‘prolonged’ and deadly storms like Cyclone Idai: Guterres

Here are 10 of the most urgent health challenges we’ll face in the 2020s, according to WHO

Women Win in the West

This wall of shoes is for the women killed by domestic violence

School closures triple in Central and Western Africa as education comes under fire

COP25: Global investors urge countries to meet climate action goals

Coronavirus (COVID-19): truth and myth on personal risk perception

Why building consumer trust is the key to unlocking AI’s true potential

UN’s Grandi slams ‘toxic language of politics’ aimed at refugees, migrants

Budget MEPs approve €104.2 m in EU aid to Greece, Spain, France and Portugal

UN experts decry torture of Rakhine men and boys held incommunicado by Myanmar’s military

Can free trade deliver cheaper renewable energy? Ask Mexico

How private investment can boost education access and quality in the digital economy

A top economist shares 3 ways leaders can help economies recover

This AI trash can is designed to stop you wasting food

4 essential qualities for digital leaders

MWC 2016 LIVE: Ford trumpets new in-vehicle system, “fundamentally rethinks” transportation

MEPs question whether the new Migration Pact will bring about real change

Force used against protestors in Gaza ‘wholly disproportionate’ says UN human rights chief

Compensation for damages by the State for infringement of EU law: the European Commission refers Spain to the Court of Justice for its rules on the compensation for damages incurred by private parties

Gender is where the feminist and LGBTI movements meet. Here’s why

UK economy in dire straits: leading banks now officially plan to Brexit too

European Parliament the most trusted EU institution

Refugee crisis update: EU seeks now close cooperation with Africa while Schulz is shocked to witness live one single wreck full of immigrants

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