Why impoverishment and social exclusion grow in the EU; the affluent north also suffers

Marianne Thyssen, Member of the EC in charge of Employment, Social Affairs, Skills and Labour Mobility, participated in the 4th Annual Convention of the European Platform against Poverty and Social Exclusion. Obviously the EU doesn’t focus where the real needs are. Brussels prefers to promote its own irrelevant actions and faces. (EC Audiovisual Services. Location: Brussels – The Egg).

The European Union which mobilizes its warships to keep the flows of poor and destitute refugees and immigrants out of its supposedly prosperous interior, at the same is impotent to offer to its own citizens not a prosperous life but not even a secure economic and social environment. According to Eurostat, the EU’s statistical service, “In 2014, 122 million people, or 24.4% of the population, in the European Union (EU) were at risk of poverty or social exclusion”. It’s not a war with guns and air raids but still it’s a war with financial and economic means that impoverished and ostracized one quarter of EU citizens.

Risking everything

The part of a population at ‘risk of poverty or social exclusion’ comprises three categories of people: those hit by income poverty plus those being severely materially deprived and finally those who live in households with ‘low work intensity’. In short, one in every four EU citizens falls in one of those three categories. Understandably, the 2008 -2010 financial crisis worsened this deplorable situation. The percentage of people in the above groups kept increasing after 2008.

Unfortunately, the highly advertised recovery of the EU economy after the second quarter of 2013 didn’t change that. Even in Germany the population at risk of poverty or social exclusion was in 2014 above the 2008 levels, with 20.6% and 20.1% respectively. The same is true for the entire EU; the 2014 overall figure remains above the 2008 levels.

Who pays the dearest price

In 2014 more than one third of the population in three member states was at risk of poverty or social exclusion, in Romania (40.1%), Bulgaria (40.2%) and Greece (36%). Surprisingly enough, the lowest percentage of citizens in this category was observed in an non-affluent country, the Czech Republic, with 14.8%, while Sweden turned out the second lowest figure at 16.9% and the Netherlands at 17.1%.

Not unexpectedly, between 2008 and 2014, the largest increases of this unlucky part of the population were found in countries worst hit by the financial crisis. In this respect Greece is a typical case, with this percentage jumping from 28.1% to 36% between 2008 and 2014. The same negative development was observed in Spain with an increase from 24.5% to 29.2%. Cyprus is the third country with the largest increase of the percentage of people in this category in the same six-year period, from 23.3% to 27.4% between 2008 and 2014.

Income poverty

As mentioned above, there are three sub-categories of people at risk of poverty or social exclusion. The largest one is the people at risk of ‘income poverty’. It’s about those who may be working even full-time but gain so little that their disposable income remains below the national at-risk-of-poverty threshold. Mind you this is happening in the European Union that the world considers to be an island of prosperity and social justice. One can imagine what everyday life is like for the average working people elsewhere in the planet.

Coming back to Europe, it is interesting to note that the sub category of people at risk or income poverty is steadily increasing throughout the 2018 -2014 period. And this tendency continued during the years after 2012 in which period a lot of European politicians, dignitaries and bureaucrats insisted that the EU had entered into a growth path. The percentage of EU citizens at income poverty was 16.6% in 2008 and increased to 17.2% in 2014. Reportedly this trend is still valid.

It’s the inequality stupid

A similar trend was more or less likely to occur in countries which have lost a larger or smaller part of their GDP in the post crisis period like Greece, Spain, Italy, Ireland, Portugal, Cyprus and others. However, the continuous increase of the percentage of the population at income poverty (after social transfers) remains a fact even for member states like Germany (from 15.2% to 16.7%) and Sweden (from 12.2% to 15.1%). Both those affluent countries have managed to steadily increase, albeit slowly, their GDP during the period in question. Yet they didn’t avoid a worsening of income poverty.

Severely materially deprived

Let’s pass on now to the category of severely materially deprived people. According to Eurostat, “Severely materially deprived persons have living conditions severely constrained by lack of resources, they experience at least 4 out of the 9 following deprivations items: cannot afford i) to pay rent or utility bills, ii) keep home adequately warm, iii) face unexpected expenses, iv) eat meat, fish or a protein equivalent every second day, v) a week holiday away from home, vi) a car, vii) a washing machine, viii) a color TV, or ix) a telephone”.

The same source found that roughly one out of ten people (8.9%) in the EU fall in this category. Needless to say that Bulgaria (33.1%), Romania (26.3%), Hungary (23.9%) and Greece (21.5%) top the list. Those percentages are appalling. They mean that one in three or one in five persons cannot support a warm home or have a protein meal every two days, let alone own a car, a color TV or a washing machine.

Low ‘work intensity’

Last but not least, in the analysis of poverty and social exclusion comes the sub-category of the EU citizens who live in households with ‘very low work intensity’. They are roughly one out of ten (11%). Again Greece and Spain lead the catalog with 17.1% and 17.2% respectively. According to Eurostat “People living in households with very low work intensity are people aged 0-59 living in households where the adults work less than 20% of their total work potential during the past year”. In the above mentioned countries almost one out of five people live in households where unemployment reigns.

Non-standard forms of employment

It’s shocking though to notice that in this respect, in the affluent north EU member states, the situation is also deplorable albeit less extreme. The relevant figure in Belgium is 14.6%, in the Netherlands 11.1%, in Britain 10.4% and in Germany 10%. In all those member states the overall unemployment rate remains at very low single digit figures. The contradiction between the statistically low unemployment rate and the high percentages of ‘very low work intensity’ of households cannot be easily explained. An obvious cause for this antithesis can be the increasing exploitation of non-standard forms of employment which vary widely between the EU member states.

Invariably, the standard form of employment can be defined as a full-time job in one employer. Unquestionably, the non-standard forms undermine the rights of workers and the end results are a much reduced pay, irregular work timetables and abated social insurance coverage and pension schemes, if any at all. Not to forget that in many EU countries, not necessarily in the less affluent ones, an increasing part of the labor force is employed in the dark side of the labor market outside any legal scheme, reminding in many respects modern slavery.

The new immigrants and refugees are more vulnerable to such treatment. Not surprisingly then why Germany boasts it can absorb 800.000 refugees and immigrants this year. The German employers have an excellent know-how of how to exploit various non-standard forms of employment.

The most sticking consequences of the rapid expansion of the non-standard forms of employment during the past few years are the double digit ‘income poverty’ and the severe material deprivation. In short, those have become the key characteristics of our brave new European Union.