Bogged Down in Crisis

eu debt 2

Since the outbreak of the financial crisis in 2008, Europe has been dooming itself in the ”anti-crisis” measures it undertakes. The discourse that accompanies those measures is far from reality and escapes tough questions. The language is being modelled according to the will of the EU policymakers, avoiding words such as ”crisis”, ”recession”, ”bailout”, ”depression” or ”unemployment”. Instead we hear endless assurances of ”the green light in a tunnel”, ”debt consolidation”, ”labor flexibility” or ”structural adjustment”1. Euphemisms that serve to describe brutal reality in which the EU is bogged down since the beginning of crisis. Or maybe it would be better to say CRISES.

Public debt crisis

Joseph Stiglitz who duing the World Economic Forum 2014 in Davos stated: ”Europe’s in a recession and many countries in Europe are in depression” hit the point2. Regardless of what the EU politicians , who often do not have anything in common with economics, are describing to the EU citizens, the depression in Greece, Portugal, Spain is becoming unsustainable for the peoples of those countries. The recession that is persistent in other European countries (and not only the euro zone, as the whole EU is affected) does not resemble ”the green light in a tunnel”. The data that has been recently presented by the European Commission is deplorable! And at some points presents rather imaginary outlook.

For Spain the balance is critical3: the General Government Gross debt (or simply public debt) as a % of GDP has more than doubled since 2004-2008, from 41.1% to 86% in 2012 surpassing 100% in 2014 with growing tendency reaching 103.8% in 2015. The short-sighted decisions skyrocketed the debt only in few years. Are the future generations willing to carry on this burden? Other coutries are no better: Greece’s public debt is soaring. According to the EU Commission in 2013 it has exceeded 175% this and year will reach 177%, ”slightly falling” in 2015 to reach 172.8% (why falling they do not explain, however, it does not seem to happen as Greek’s contracting economy is not capable of growing and thus reducing the debt if the austerity measures will be present)4. However, other countries are not getting better with its debt reduction – for example Belgium’s public debt will reach 101% this year.

eu debt

Other economies that are presented as an example of functioning austerity measures are also doing badly, and the total Euro Area debt will reach 96% this year with a prediction to fall only a bit next year – 95.4%. The European politicians are blinding themselves with the belief that everything is going to be fine and that the ”structural adjustments” are working. Unfortunately they are not planning any long-term goals in their policies, and the consecuences of such skyrocketed debts will have to be paid by the future generations – but the responsibles for the situation will no longer be around us….. Do those policymakers who are bogging us deeper and deeper in the crisis are sleeping well at night?

Youth Unemployment Crisis

One of the consecuences of austerity policy is a growing unemployment. The consecuences of the destruction of human capital will be longlasting in the entire EU. One can argue that the unemployment crisis will have far more complex outcomes than the financial crisis. Although th average unemployment rate in the Euro Area is estimated to reach 11.8% in 2014, and 11.4% in 2015, many of the countries will be facing stagnancy in the area of employment. Greece and Spain will be heading the list with about 25% unemployment rate. So more or less the same as since 2011, when the austerity policy has started. Unfortunately, the EU Commission did not measure the youth unemployment which uncovers the ”recuperation” the EU states are supposedly undergoing. Greece, Spain with around 55% of youth unemployment rates5, Portugal and Italy with around 40%, Slovakia, Cyprus and Ireland 30%. Other countries are also badly affected. The worst thing is that the youth unemployment is becoming a commom tendency and there is no strategy on how to fight it and incorporate young people into the labor market. And again as Joseph Stiglitz says, ”this is a man-made disaster”6, because of what the EU leaders together with corporate leaders are doing to the youngsters.

unemployment eu

The outcomes are dramatic: young people who stay at home are doing the voluntary work, if they are hired they do not have a contract which would make their situation stable, they work some hours during the week to earn a bit, finally they decide to emigrate in search for better life. They reach the country they were hoping to find work in and they are left with nothing. And this not happens outside Europe but inside, where during generations we were building a ”free market” with a free flow of people who are willing to find work in other EU countries. The obstacles that are being imposed on immigration are terrifying: illegal immigrants in Spain have lost their access to medical care, Spanish young immigrants are losing their medical security after spending 90 days abroad,7 immigrants from Romania and Bulgary are expelled from countries like France and Germany is thinking how to make the life worse for immigrants (if they do not find work in 6 months)8. One can wonder why in such case Mr. Jean-Claude Jüncker is offering to introduce minimal wage, 8.5€ per hour in the whole European Union when he becomes the head of EU Commission…bad joke Mr. Jüncker, one should not make such illusions in the time of crisis.

Any remedies?

The crises that is suffering EU, from debt, unemployment, migration, demography, finance to the currency crisis are widespread and complex. A few ”remedies” that have been used only aggravated the situation. The introduction of austerity policy was, in the words of Joseph Stiglitz, ”a suicide”. However, the EU politicians stubbornly are going deeper and deeper into it. Even if they know they made a mistake no one would admit it. This is the worst thing to happen in the European Union, the lack of leadership who would suffer the consequences and would stop bluffing the public opinion. The situation is very bad. The European Parliamentary elections on the 25th of May may be the last resort for the citizens to respond to the hardships they are bearing (absence is also a manner of exercising democratic rights).

eu elections

The euro currency created to compete with dollar on the international financial market failed. It is time to understand that and undertake necessary measures either to save the currency (building a stronger union, common deposit insurance, common supervision and resolution) or by sacrificing euro currency and making the countries more competitive. There are also some obstacles to that, as the corporate leaders realized that people will work the same or more regardless of what you pay them, they are taking the advantage of their workers. Europe, once the symbol of labor unions and workers protection is deepening the gap between rich and poor exposing itself to social inequalities which lead to social conflicts.

Ulka Skwarek

















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