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Social Justice Index 2016

Europe’s “Working Poor” and Populism are on the Rise

21/11/2016, BY DANIEL SCHRAAD-TISCHLER & CHRISTOF SCHILLER

Unemployed © Rob Milsom via flickr.com, CC BY-ND 2.0
Unemployed

For the first time since the economic crisis in 2008, EU citizens’ opportunities for social participation have improved slightly. But not everyone is benefiting – and the risk of poverty and diminishing prospects play into the hands of rising populist movements in Europe.

Thanks to an upward trend on Europe’s labor markets, the EU is gradually recovering from the economic and financial crisis. Significantly more people are now employed than at the peak of the crisis in 2013. In 2015, almost two thirds of EU citizens (215.7 million people) were employed, which is a slight improvement from the previous year. At the same time, the unemployment rate dropped from 10.4 percent in 2014 to 9.6 percent in 2015. Due primarily to the positive development of the labor market, the EU-wide decline in opportunities for social participation in recent years appears to have been halted for the moment. A first sign of hope after years of decline.

However, huge problems remain and the EU is still far away from a state of social justice that would justify a Triple-A rating in social terms, as was postulated by Jean Claude Juncker as a laudable goal two years ago. Unemployment in Europe is still above the pre-crisis level of 7.1 percent in 2008. The same is true of youth unemployment: EU-wide, 4.6 million young people (20.4 percent) are still unemployed. The rate in 2008 was just 15.6 percent.

Poverty risk despite full-time employment

Moreover, what we observe in the EU today is a conspicuous continuing rise in the share of fully employed people who are nonetheless threatened by poverty. In 2015, 7.8 percent of full-time workers in the EU were at risk of poverty, compared with 7.2 percent in 2013. The reasons for this include a growing low-wage sector and a division of the labor markets into regular and atypical forms of employment. The increase in the numbers of “working poor” is alarming, as those affected are excluded from full social participation. When a growing share of people cannot live from their work over a long period, it undermines the legitimacy of our economic and social order.

Even worse, it can create considerable political instability in the end. The subject of refugee integration has seen an increased political polarization in many countries. More and more populist politicians and parties are using conflicts around distribution to their advantage. We cannot entirely predict at this point what impact the political polarization will have on the state of social justice in Europe. It seems clear, however, that feelings of insecurity amongst a growing number of workers need to be addressed more firmly by decision makers in the future.

Youth in southern Europe have lowest opportunities for social participation

What makes it even worse: Children and youth are profiting much too little from the economic recovery. Especially in the crisis-stricken countries in southern Europe, the share of young people threatened by poverty or social exclusion remains extraordinarily high. In all 28 EU countries, the opportunities for social participation among children and youth are still considerably lower than before the crisis. EU-wide, 25.2 million (26.9 percent) children and youth up to the age of 18 are threatened by poverty or social exclusion.

In the crisis-ridden countries of Greece, Italy, Spain, and Portugal, the rates are even higher, with every third child being threatened by poverty. That is, one million more children and youth in these four countries are now at risk of poverty and social exclusion than was the case in 2008. The situation for young people in Greece remains especially dramatic. The share of children and youth there who suffer from serious material deprivation rose once again, to today 25.7 percent.

The southern EU countries are additionally struggling with the problem of a high share of so-called NEETs (young people who are “Not in Education, Employment, or Training”). These youth live entirely outside employment and training structures, which leaves them with virtually no chance of social advancement. In Italy, this group includes almost one third of young people. In Greece and Spain, the rates are likewise significantly above the EU average of 17.3 percent.

It is thus of paramount importance, that governments, firms, employers and unions in EU countries collaborate and increase their efforts to seek new innovative ways to create additional decent and sustainable employment in the years ahead. The youth of Europe deserves a new fair deal, which provides it with better opportunities to enter the labour market and to advance in their careers.

Gap between old and young threatens the legitimacy of our political systems

The new Social Justice Index also makes clear the growing gap between young and old. EU-wide many more children than older people are affected by poverty or social exclusion. While almost 10 percent of children in the EU suffer from serious material deprivation, the rate among people over 65 years of age is 5.5 percent. The share of older people threatened by poverty or social exclusion decreased from 24.4 percent in 2007 to 17.4 percent in 2015.

The situation of youth who have been left behind poses a real danger for the future of European societies. In the 2014 European Parliament election, for instance, younger people were already the largest group of abstainers: 72.2 percent of 18-24 year-olds did not vote, as compared with 48.7 percent in the 55+ age group. We must not risk a withdrawal of a disappointed and frustrated youth from society. In order to strengthen equity between generations, we also must revise the intergenerational contract such that future financial burdens are shared more equally.

The diminishing prospects for young people and a growing segment of workers may not only lead to political apathy but also play into the hands of populist movements in Europe. From Germany’s right-wing Alternative für Deutschland, Britain’s UKIP, the French Front National to Spain’s anti-austerity movement Podemos – populist parties in Europe are on the rise. One thing thus is certain, though: the issue of social cohesion will become the key question affecting Europe’s future in the coming years.

Daniel Schraad-Tischler is Senior Expert at Bertelsmann Stiftung where he heads the Sustainable Governance Indicators project. He is the author of the Bertelsmann Stiftung’s Social Justice Index 2016.

Christof Schiller works as project manager for the Bertelsmann Stiftung's Sustainable Governance Indicators project. He is the author of the Bertelsmann Stiftung’s Social Justice Index 2016.

This opinion piece was first published on EurActiv.com.