An increase of 6 million people in poverty in the EU over 10 years - EU was struggling long before Covid-19 crisis

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The European Union never fully recovered from the financial crisis of 2008 and without substantial and coordinated action now, the current social and economic crisis could destroy it.

Over ten years on from the financial crash, and after six years of economic growth, before the onset of Covid-19, across the European Union there were 16.8 million people unemployed, 6.65 million people long-term unemployed, and 86 million people living in poverty of whom 19 million were children.  This presents significant challenges as Europe grapples with the social and economic consequences of the current crisis.

A strong response based on the European Social Model is required.  The European response must be focussed on protecting people across the lifecycle, young and old, men and women, those with an income and those with no incomes.  Those people who were already in a difficult situation before the Covid-19 crisis will be hit the hardest, and unlike in 2008, they must be protected as part of any recovery.

The findings of 'A Rising Tide Failing to Lift All Boats' - the latest publication in Social Justice Ireland's European Research Series regarding child poverty, young people not engaged in employment, education or training and in work poverty are particularly concerning.  These issues must be resolved as an integral part of any investment and recovery package.

Social Justice Ireland’s research has consistently shown that a more integrated social dimension across the European Union is required to ensure the European Social Model can meet the challenges of new realities.  This report points to the need to examine alternatives and to develop a social welfare and support system that can adapt to changing realities and withstand future shocks in a post-COVID world.  Minimum income schemes, the Living Wage, Basic Income schemes, the changing nature of work, adequate investment, access to quality services, representation and sustainability are policy areas which are discussed and examined in this research. 

Key findings from the report:

Poverty

• In 2018, 17.1 per cent of the population (EU-28) was living at risk of poverty (over 86 million people), there were 6 million more people affected in 2018 than in 2008.
• Around one fifth of Europe’s children (around 19.2 million) are at risk of poverty.  The fact that such very high numbers of children continue year on year to experience poverty or social exclusion is a major concern and has long-term consequences for the people and families concerned as well as for the EU as a whole. 
• The social indicators suggest little improvement for very many people living in Europe, with dis-improvements for some groups in several countries. These include older people in some countries, an issue that  particularly affects older women.
• Overall, while there have been some improvements in the latest years (2017-2018) in several indicators and for key groups, Europe is still far off-track in relation to meeting its poverty reduction targets.

Employment

• In 2018 there were 16.8 million people unemployed and 6.65 million people long-term unemployed (representing over 40 per cent of total unemployment across the EU, a cause for concern)
• About 10 per cent of employed people in the EU live in poverty on an ongoing basis, which is a cause of concern. This issue now affects a greater proportion of people than it did in 2008.
• There are significant variations in the employment rates in different countries. In many Member States, employment rates have still some way to go to recover from the crisis. Sweden continued to have the highest rate (82.6 per cent in 2018), while Greece continued to have lowest (59.5 per cent in 2018), a 23 percentage point difference between the two countries.
• It has been estimated that those who are unemployed, those who are involuntary part-time workers, and those who are inactive but willing to work represent somewhat over 40 million people
• Some countries still have rates of employment that are a good deal lower than in 2008 – this is very notable in Greece and Cyprus.

Young People

• There were 3.4 million young people aged under 25 unemployed (the highest rates are in Greece, Spain and Italy).
• Of particular concern is the number of young people who are neither in education nor employment (NEET).  The EU-28 average NEET rate (ages 15-24) was 10.5 per cent in 2018.  The NEET rate (ages 15-24) was highest in Italy where almost one in five young people (19.2 per cent) were affected.  
• The NEET rate for slightly older age groups the picture is even more concerning. The EU-28 average NEET rate for those aged 20-24, in 2018 was 14.9 per cent almost no change since 2008.  Looking at an even older group (ages 20-34), the 2018 rate was even higher - 16.5 per cent, again no change from 2008.  The fact that the rate remains relatively high for these ‘older’ NEETs is a trend that should be of concern.  It shows that some groups are already falling behind and labour market disparities are increasing.

Lessons for policy makers

There are also concerns about the way that the employment picture is evolving in recent years – especially regarding growth in temporary, part-time and precarious work and falling or stagnating wages. 

Overall, it is clear that the dangers of ongoing high levels of child poverty, social exclusion and deprivation are very serious. Poverty in all its forms still affects far too many children and childhood poverty remains a pressing problem because of its long-lasting effects on society and on the lives of individuals. A range of interventions are necessary to address this situation including access to affordable, quality early childhood education and care, along with well-designed work-life balance policies.

Taking a step back for a moment, despite welcome improvements in employment in the EU prior to the Covid-19 pandemic, there were still significant challenges. On the positive side, it is interesting that projections of the impacts of a full implementation of the Paris agreement – if that were to happen - show that the transition to a low-carbon economy could raise GDP and employment – amounting to an additional 1.2 million jobs in the EU by 2030, mostly in growing green sectors, which would be largely due to investment for transition.  It should follow that investment and recovery packages across the EU member states should focus on just transition and addressing persistent inequalities. 

One of the key findings of this report is that the European Union itself and many member states never fully recovered from the financial crisis of 2008.  This should inform investment policy at EU level as work on rebuilding our society and economies gets underway.  In this time of unprecedented crisis, the European Union must heed the lessons from the financial crash of 2008 and emphasise investment rather than austerity.

A Rising Tide Failing to Lift all Boats is available do download here.