Increasing poverty in Europe

The European Commission published the third edition of its annual report on ‘Employment and Social Developments in Europe’ (ESDE). The analysis focuses on labour market and social inclusion developments that accompany the European Semester process in order to achieve the Europe 2020 goals.

Many of the aspects covered in the report are affected by the economic crisis, although there have been first signs of economic recovery in 2013. However, the report shows an increase of poverty amongst the working population with nearly a quarter of the EU population at risk of poverty or exclusion. Although the rise of unemployment has flattened, even in some countries worst affected by the crisis, unemployment is still growing and the number of jobless households had increased.

According to the report, the growing divergences between countries are a danger for the functioning of the EU’s Monetary Union and the EU as a whole. In order to regain cost competitiveness, Eurozone countries can only rely on internal devaluation with wage and price containment, which has an impact on unemployment and social hardship. Moreover, this policy depends on many factors, such as the openness of the economy, the strength of external demand, and the presence of policies and investments enhancing non-cost competitiveness.

Partly as a consequence of a growth in part-time work and lower wages, in-work poverty is on the rise. The report shows that getting a job is a way out of poverty in only half of the cases. According to the report, undeclared work is still a structural problem within labour markets and the crisis has led to its increase on account of social protection expenditure being cut. The report also warns that undeclared work has negative effects on social security systems and individual social security rights. Moreover, gender differences still persist in terms of lower labour market participation of women, lower pay and a higher risk of poverty amongst women. The report also underlines the role of social protection expenditure as an important tool for people to exit poverty. The likelihood to find a job for jobseekers increases if they receive unemployment benefits. Moreover, the analysis stresses that social protection expenditure is an economic stabiliser and the size, structure and design of social expenditure are all important for its effectiveness and efficiency.

The European Commission calls for an investment not only in job creation, but also in inclusive labour markets and decent working conditions: "We need to pay attention not only to job creation, but also to the quality of jobs, in order to achieve a sustainable recovery that will not only reduce unemployment, but also poverty", stressed Commissioner for Employment, Social Affairs and Inclusion, László Andor.

Resources

Highlights from the Employment and Social Developments in Europe expert conference

Employment and Social Developments in Europe 2013 – full report