Europa 2020 – Social poverty reduction and unemployment

The European Union has still work to do before reaching the main objectives of the Europe 2020 regarding poverty reduction and job creation.

Since 2010, Europe 2020 starting year, in some Member States the unemployment levels did not stop increasing and in 2014, the unemployment rate in the European Union reached 10.1% with 24.6 million unemployed persons and a bigger and bigger number of poor workers. Since 2008, the number of people at risk of poverty or social exclusion has increased 10 million to over 122.6% million. The risk of poverty’s average rate in the EU is 24.8% whereas in minors’ case (up to 18 years old) it is 28%.
The disabled persons’ poverty rate exceeded the average in 70%.

In order to reach in 2020 the objective of an employment rate of 75%, an employment to other 16 million citizens should be ensured. According to the last Commission’s previsions, in 2015 the unemployment rate in the European Union will drop only 10.4%, an insignificant reduction.
The high unemployment rates in the European Union are due to an industrial and manufacturing production’s drop.

The youth unemployment rate reached the alarming level of 23.3% (average in the EU in 2013) and more than 40% of young people work with fixed-term contracts and about 25% on a part-time basis. This level is due to the lack of effective measures that stimulate public investments in innovation, research, qualifications’ development and professional competitions.
The European Social Fund supports the efforts for achieving Europe 2020 objectives through measures to fight against unemployment, concretely, the youth one. The investment of 300 thousand million euros promised by Jean-Claude Juncker might be used to reach these objectives

In the conclusions from the 27th of June 2014, the European Council highlighted that the current unemployment rate of the EU is inacceptable and he set a strategic agenda focused on employment, growth and competition. The demographic challenges and the population’s ageing will keep having a great repercussion in the Member State’s capacity for being able to achieve the objectives of Europe 2020 strategy.

A greater economic growth does not mean a guarantee for a decent employment nor poverty reduction or social inequalities; we need adapted political decisions which do not focus only on economic growth but on recognising the necessity of an inclusive and sustainable approach based on the rights.

We must bear in mind the social speakers’ importance in regards to labour market’s policies. Their enquiries should take part of the process. The Member States have to be more receptive with labour market requirements, concretely ensuring them strong links with the instruction world.

In order to increase the employment rate to 75%, States should improve their leadership and management capacity and entrepreneurship spirit among young people for allowing emerging companies to benefit from new markets and to be able to make the most of their growth power.

It is necessary:

• To focus the attention on struggling against youth unemployment, one of the most serious problems in the EU currently, putting new funds aside to the “Erasmus for young entrepreneurs” program and supporting entrepreneurship spirit and young people’s mobility for fighting youth unemployment, poverty and social exclusion.
• To remove administrative charges and unnecessary bureaucratic formalities undertaken by self-employed workers and to make easier new firms’ start-up; transfer work fiscal taxes to other sustainable ways of taxation for encouraging growth and job creation;
• Consulting the interested parts of the civil society, would not only increase democratic legitimacy of the process and the probability of reforms to be accepted by the citizens and applied successfully, but it would also strengthen the base of the knowledge for reform’s evaluation.

Poverty, apart from representing a daily fight for dignity and survival, it causes damages on economy and growth; it reduces demand, and affects negatively to public finances.
According to the Commission, between 2010 and 2012, poverty and social exclusion have raised in the most affected by the crisis States including Greece, Ireland, Spain, Italy and Cyprus. In contrast, they have decreased in Poland, Lithuania and Latvia, whereas they remained stable in Czech Republic, Germany, France, Holland and Portugal.

In order to face the crisis, some Member States have applied big cutbacks to public expense while, because of unemployment increase, the demand for social protection has grown.
Many families are experiencing deterioration in their living condition. Austerity measures have reduced the public services’ availability and quality that are essential for people at risk of poverty or social exclusion; rates’ increase from some basic services produces negative long-term effects to people or to their participation capacity in social life.

According to the European commissary László Andor, who participated during the conference about the Europe 2020 poverty objective, the imbalance in the poverty level between societies from European States represents a “threat to the economic efficiency of the Economic and Monetary Union because none Union can work if their members keep moving away progressively”.

The Nobel Prize Amartya Sen noticed that there are three different aspects in unemployment:

• the incomes aspect: employment provides the assurance of getting incomes to workers;
• the productive aspect: employment ensure an increase in the production of good and services;
• the acknowledgment: the employed person performs a useful activity.

In addition, not only the initial benefits from job positions, incomes assurance and the raise of better quality services for the community are present, but there are also many indirect benefits: economic and social multiplier that direct benefits imply. From the economic point of view, job creation and increase of employment incomes mean future increases in private expenses and in greater profits for the whole community. Social multipliers are related to benefits for all individuals and the community, that is, crime, drug trafficking and family crisis reduction.

The job creation brings powerful benefits like:

1. Financial assurance’s increase, encouraging a better quality of life.
   If the individuals are in an unemployment situation, they will not have subsistence means for their families and for themselves. They have the obligation to spend their savings, go into debt or recieving help from public or private assistance in order to get their needs.
2. It ensures greater private expenses with higher wages and greater benefits for the companies.
   A community with a high unemployment rate has little purchasing and consumption power.
   Entrepreneurs record little sales and they cannot invest enough nor hire new workers.
3. Crime decrease, since many studies show the direct relationship between employment and crime increase.
4. Improvement of local budgets.
   Unemployment implies greater public expenses from the main government and less incomes coming from taxes. The government invests more for the different ways of help to unemployed and people under their responsibility.
5. Formation continuity and end of studies
   The unemployment is directly related to the increase by young people who abandoned school.

The policies and the measures defended by the European Institutions, although they are embraced and applied consciously in every country from the Union, with a progressive improvement of the social and economic situation, will be able to contribute in a positive way to the Europe 2020 strategy’s compliance.

Egidio Ramondetti
Italian Delegate