July 21, 2017

Inside Europe: Young People Left Out as European Social Fabric Tears

PARIS — Grigoris Lemonis, a 73-year-old retiree in Athens, uses his monthly state pension of €580 to support his wife and the family of his son, an unemployed cook with two small children and a wife who works occasionally as a cleaner.

Three-generation families surviving on a single income are increasingly common across Southern Europe as mass unemployment tears at the fabric of closely knit societies.

“Daily life has become pure misery,” said Mr. Lemonis, a former painter in the construction industry who owns his home. “We are up to here with bills, and once all that is paid, there’s nothing left to live a decent life,” he said, adding that with the pension — the equivalent of about $750 — the family can afford meat only once or twice a month.

With more than 26 million unemployed in the 27 nations of the European Union, including nearly six million young people, the system is struggling, and in some places failing, to cope. Many of the jobless have exhausted their benefit entitlements.

“In many countries, the poor are getting poorer,” said Laszlo Andor, the E.U. commissioner for employment and social affairs, pointing to a growing North-South divergence. “Europe’s social fabric is clearly under pressure and a stronger response at E.U. and national level is needed.”

Social spending rose across the Continent in the first phase of a prolonged economic crisis that began in 2008, and engulfed the euro zone in a sovereign debt crisis beginning in 2010. But the states that have been hit hardest — Greece, Ireland, Italy, Portugal and Spain — have now had to cut outlays on pensions, health care, education and unemployment benefits.

Countries that direct social spending toward providing services like child care, vocational training, job-search assistance and accessible health care have better results than those that spend most on cash payments to retirees and the unemployed, Mr. Andor said.

Countries like Italy and Poland, which spend a higher share of their social budgets on pensions, tend to be less effective in alleviating poverty because the working-age population most severely hit by the crisis is less well covered, he said.

Political leaders are fretting about the affordability of the European social model in an era of high public debt, low growth and aging populations.

“If Europe today accounts for just over 7 percent of the world’s population, produces around 25 percent of global G.D.P. and has to finance 50 percent of global social spending, then it’s obvious that it will have to work very hard to maintain its prosperity and way of life,” Chancellor Angela Merkel of Germany told The Financial Times last December, referring to gross domestic product.

Social spending as a proportion of output is, on average, at least 6 percent higher than in 2007 in the 34 countries of the Organization for Economic Cooperation and Development, an association of free market democracies of which 21 are E.U. members. Moreover, aging populations are set to drive up the costs of pensions and health care in coming years, the O.E.C.D said.

The majority of E.U. governments have used the crisis as a reason to raise the retirement age, bringing it more into line with increasing life expectancy, said Willem Adema, an O.E.C.D. expert on employment, labor and social affairs.

Social scientists distinguish three broad welfare models: Nordic, Continental European and Anglo-Saxon.

Nordic countries offer a high level of “cradle to grave” welfare with an emphasis on preschool child care and education, which is designed to keep women and older people in the labor market.

The Continental model features contributory social insurance systems that offer strong protection to insiders with protected jobs, while continuing to regulate employment and the labor market.

The Anglo-Saxon model tends to make welfare payments smaller and more selective and encourages private provision of health care, education and pensions for the better off.

The Nordic model seems to have proved the most effective at reducing poverty without discouraging people from work, although it comes with the highest taxes.

Britain and Ireland pay cash allowances to stay-at-home single mothers, contrary to the O.E.C.D. and E.U. view that such money is better spent on providing public child care.

“It makes more sense to get people into work” than to focus on benefit to stay home, said Mr. Adema of the O.E.C.D. “Yet amazingly, some countries are cutting preschool child care.”

European governments have found it easier to trim welfare systems at the edges than to change them radically. It is politically difficult to spend less on the elderly and more on young children and to teach skills and promote employment among those who leave school. Older people vote more than the young.

“In many countries, it is the middle class who are the direct beneficiaries of social security entitlements,” the analysts Patrick Diamond and Guy Lodge wrote in a paper for the Policy Network, a British research group. “This makes pensions and welfare payments to older cohorts practically untouchable.”

The Netherlands, where retirees enjoy the highest purchasing power in Europe, provides an example. The recently created 50PLUS Party, which campaigns on behalf of pensioners, won two seats in the 150-member Dutch Parliament last year.

Support for the gray movement has soared since the coalition government of the center-right Liberals and the center-left Labor Party agreed to raise the retirement age to 67 from 65 by 2021. A poll this month showed that 50PLUS would win 18 seats if an election were held now, making it the third-biggest party.

Older voters may fight for their interests, but they also should grasp the need to leave resources for social spending for the young. Just ask Mr. Lemonis, the Athens retiree supporting two younger generations on his dwindling monthly allowance.

“At least we pensioners are old and we’ve lived our lives,” he said. “I’m worried about our children. What will they do when we can no longer help them?”

Paul Taylor is a Reuters correspondent. Karolina Tagaris contributed reporting from Athens and Sara Webb from Amsterdam.

Article source: http://www.nytimes.com/2013/03/19/business/global/young-people-left-out-as-european-social-fabric-tears.html?partner=rss&emc=rss

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