MercoPress. South Atlantic News Agency

EU employment and social situation rapidly diverging and deteriorating

European Commissioner for Employment, Social Affairs and Inclusion László Andor

The employment and social situation in the EU remained very serious in the second quarter of 2012 with unemployment rising overall but also displaying significant differences between Member States, households' financial situation deteriorating and child poverty increasing, a press release of the European Commission (EC) informs.

The EU has been in recession or on the verge of it since late 2011 and the overall economic sentiment is at its lowest level in three years. In this context, job-finding prospects remain poor compared to pre-crisis years. Greece and Austria recorded the highest number of hours worked by full-time employed persons in the first quarter of 2012, while Finland, Italy and Ireland recorded the lowest number. These are amongst the main findings of the latest Employment and Social Situation Quarterly Review.

“Member States' employment and social situations are diverging more than ever. This is why Member States should urgently implement the 2012 country-specific recommendations adopted last July and should put in place the measures outlined in the Commission's Employment Package”, commented European Commissioner for Employment, Social Affairs and Inclusion László Andor.

“The steady decline in households' disposable income and growing child poverty reflect the existence of a 'real social emergency crisis' as referred to by President Barroso at the Jobs for Europe conference and underline the need for stepping up social investment across Europe. The Commission will address this in its forthcoming Social Investment Package.”

Especially worrying is the fact that unemployment is still on the rise and has climbed to 25.3 million, a historically high level, up by 2.6 million (+11.6%) compared to March 2011. At 10.4% at EU level, the unemployment rate rose in 17 Member States and disparities have again widened between the better-performing EU countries on the one hand and the “peripheral” countries on the other hand.

There is now an all-time record gap of 20.6 percentage points between the EU lowest (Austria, with 4.5 %) and highest (Spain, with 25.1 %) unemployment rates. The number of long-term unemployed has increased in 15 Member States since last year and reached 10.7 million. The long-term unemployed now account for 4.5 % of the active population (+0.4 percentage points over the year).

Youth unemployment is at a dramatic level - 22.5% in the EU in July – though it did not increase further in the second quarter. Twelve Member States recorded rates above the 25% mark, and only three remain under 10%: Austria, Germany and The Netherlands.

The gloomy outlook for the young reflects growing risks of long-term unemployment and lasting inactivity, as indicated by the rise in the number of young people neither in employment nor in education and training (NEET). The Commission is actively addressing youth unemployment and it will release later this year two initiatives, a Youth Guarantees proposal that young people get either a job or continue education or follow a training course within four months of leaving school, and a proposal for a Quality Framework for Traineeships.

Newly available detailed figures for 2011 shed further light on the broader labour market picture. Beside the unemployed, there were some 8.6 million underemployed part-time workers - predominantly women - and a further 10.9 million people were in a grey zone between inactivity and unemployment such as those who have given up searching for work.

Gross household disposable income declined in two-thirds of EU countries between 2009 and 2011, with the largest drops recorded in Greece (15.7 %), Ireland (9 %) and Lithuania, Spain, Cyprus and Hungary (all more than 4 %). This evolution is in stark contrast with the situation observed in the Nordic countries, Germany, Belgium, Slovenia and France where welfare systems and more resilient labour markets have allowed overall incomes to continue increasing during the crisis.

Nevertheless, the crisis affected significant shares of the population and caused poverty to rise also in these countries. Unsurprisingly, the share of the EU population experiencing financial distress remains historically high. Citizens of the countries affected by the steepest income declines are also generally more likely to have negative perceptions of their social situation, as the 2012 Eurobarometer on the Social Climate shows.

Child poverty is becoming an issue for a growing number of households because of insufficient earnings from parental work and inadequate support to households with children. The percentage of children at risk of poverty (after social transfers) range from around 10% in Denmark and Finland to over 20% in Spain, Greece, Bulgaria, Portugal, Italy, Romania, Latvia, Poland, Lithuania and Luxembourg. The size and effectiveness of child benefits varies considerably across the EU. Affordable childcare is a very important factor in allowing parents, and especially mothers, to work.

Among the largest Member States, the economy continued to grow in Germany, France and Poland, whereas Italy and the UK saw further contraction. In the second quarter of 2012, Spain and Portugal registered sharp losses in economic activity and employment.