The 2013/01/18 at 08:08
“After five years of economic crisis and the return of a recession in 2012, household incomes have declined and the risk of poverty or exclusion is on the rise, especially in Member States in Southern and Eastern Europe,” states the European Commission’s report on social and employment developments in Europe, published on 8 January 2013. The report underlines a little-known reality: Eastern European countries are also victims of the crisis.
“2012 has been another bad year for Europe in terms of unemployment and the deteriorating social situation,” declared László Andor, European Commissioner for Employment, Social Affairs and Inclusion. He specifies that “it is unlikely that Europe will see much socio-economic improvement in 2013 unless it achieves greater progress also on credibly resolving the euro crisis.”
Unemployment in the European Union, reaching an average of 11 % (26 million persons) – “new peaks not seen for almost twenty years” – is Brussel’s main preoccupation. The unemployment gap between the North and the South of the Eurozone “was 3.5 points in 2000, fell to zero in 2000, but then has widened fast to 7.5 points in 2011” points out the European Commission. In this way, the average unemployment rate in the North (Austria, Belgium, Finland, France, Germany, Luxembourg and Netherlands), following a strong rise in 2009, returned to pre-crisis levels at the end of 2011. Over the same period, unemployment soared in countries in the South (Cyprus, Estonia, Greece, Ireland, Malta, Portugal, Slovakia, Slovenia, Spain), reaching almost 15 % at the end of 2011.
As observed by the Commission, “a new divide is emerging between countries that seem trapped in a downward spiral of falling output, fast rising unemployment and eroding disposable income and those that have so far shown good or at least some resilience. The latter tend to have better-functioning labour markets and more robust welfare systems”.
As far as disposable income goes, an absence of economic recovery has provoked a drop in disposable household income in two-thirds of European Union countries. While threats of poverty and exclusion hang over more than 24 % of the Portuguese and 27 % of the Spanish, they also strike the Polish and the Estonians in the same proportions. Meanwhile, their Hungarian and Lithuanian neighbours are experiencing a situation similar to that of the Greeks, 31 % of whom are targeted by these dangers.
However, the situation is not as worrying as in Rumania, Latvia or Bulgaria, where 40 to 49 % of inhabitants are exposed to poverty and exclusion.
The situation is all the more precarious as the development of these countries was financed by advantageous loan rates before the bursting of the bubble. Today, former satellite countries of the USSR have been hard hit and their dreams of catching up with the Western standard of living are vanishing. Their economic results are subdued as is the case all over the continent. Last year, Serbia’s GDP dropped by two points. The same goes for Croatia, preparing to join the European Union on 1 July this year. Although more moderate at 1 %, the decline in GDP in the Czech Republic and Hungary confirm this trend. Eastern European countries that witnessed growth increases three to four points higher than in old European countries prior to the crisis, are losing ground. Today, their increase in growth is only 1.5 % ahead of that of Western economies. In these conditions, observers are wondering about the capacity of these countries to align their standards of living with the rest of Europe.
More prosaically, European Union businesses are also concerned about this slowdown. Indeed, these Eastern European countries are important buyers of “Western” exports. And not only is Eastern Europe coveted as a market, it is also important as a production site. More and more Asians are investing there, including Kia, Mittal and Samsung, that have turned their attention to the Czech Republic, Slovakia, Rumania and Bulgaria. New prospects for jobs and activities emerge from these new implantations. And what if salvation for these countries were to be finally found from the East?