1996
European Union: Unemployment and Poverty

Greetje Lubbin
NOVIB

Unemployment

The number of people that are unemployed in the European union as a whole stood at over 18 million in 1994, almost 11% of the workforce and, though the prospects over the next year or two are for some increase in the growth of employment, the number of unemployed seems unlikely to decline very rapidly in the near future. Unemployment therefore remains the major economic and social problem confronting the European Union. While countries inthe Union face a common problem, however, its scale and characteristics vary a good deal between countries, and between regions within countries.

Recent Changes in Employment

The recent recession had a severe impact on employment in most member states. The numbers employed in the European Union as a whole declined by 4% in the three years 1991 to 1994, twice as much as any previous fall over a comparable period since World War II. As a result, 6 million jobs were effectively lost over this period.

A rough measure of success of economies in providing jobs for their citizens is the ratio of employment to population of

working age, the employment rate. Across the Union as a whole, the employment rate peaked at 62% in 1992 and fell to under 60% in 1994, after 8 years of continuous increase. This compares with rates of 70% in the US and 78% in Japan.

Recent Changes in Unemployment

The widespread fall in employment led to a steep rise in unemployment. After falling to 7,5% in 1990 from a peak of just under 10% in 1985, the average rate rose to a new peak of just over 11% in 1994. By contrast in the US, unemployment fell to under 6,5% in 1994 and in Japan, it remained below 3%.

The increase in unemployment was particularly pronounced in Finland and Sweden, the rate rising from 3,5% to 18,5% in Finland, and from under 2% to almost 10% in Sweden, in both cases after many years of unemployment below the European average.

In the former East Germany, unemployment rose from under 11% in 1991 to almost 16% in 1994. In Spain the rate rose from just over 16% to over 24%, still the highest in Europe.

Since the peak rate reached in the Spring of 1994, unemployment in the Union has come down, but only very slowly. Although growth of GDP in the Union seems to have resumed in mid–1993, this as yet has had a minimal impact on the number of people out of work.

Employment of Men and Women

A long term trend has been for the number of men in employment to decline and for the number of women to increase. In the ten years before 1985, the number of men employed fell by 4%, while the number of women expanded by 10%. In the years of high job growth at the end of the 1980s, the trend decline in male employment was halted and the number with work went up by 4,5%. Since 1990, however, the long–term trend has resumed and the number of men in employment has fallen markedly. While the employment of women has also fallen, the decline has been very much less.

The main cause for this is the decrease of jobs in industries where men account for 75% of the workforce.

Unemployment of Men and Women

Despite the larger job losses suffered by men, the rate of unemployment among women remains higher (averaging around 12,5%) than for men (averaging just over 9,5%). The only member states where the reverse is the case are Finland, Sweden and the UK. Since the peak unemployment rate in 1994, the rate for men has fallen slightly more than that for women, in the European Union.

Labour Force Growth

The numbers in the labour force, which expanded by almost 1% a year in the second half of the 1980s as employment increased, contracted during the recession years between 1990 and 1994. The lack of job opportunities led men in particular to either withdraw from the labour force or to delay entry. At the same time the upward trend in the proportion of women looking for work slowed appreciably during the last four years. These developments had a marked effect in preventing unemployment rising even more than it did.

It also indicates that there is a substantial amount of people who do not appear in the unemployment figures but who, nevertheless, would like to work if only jobs were available.

Re–employment: The Strategy of the European Union

Five key areas of policy were emphasised by the European Council as being of major importance for tackling the Union’s employment problems:

* improve employment opportunities for the labour force by promoting investment in vocational training. There is a strong long–term shift in the structure of jobs from less skilled to more skilled.

* increasing the employment intensity of growth, in particular by

- a more flexible organisation of work time and hours of work

- a moderate wage policy (below increases in productivity)

- the promotion of initiatives, particularly at regional and local level, that create jobs which take account of new requirements, e.g. in the environmental and social service spheres.

* reducing non–wage labour costs

* introducing incentives to the individual to continue seeking employment; move from a passive to an active labour market policy

* implementing particular measures to help school leavers who have virtually no qualifications, by offering them either employment or training.

Equal Opportunities for Women?

Women for the past 20 years or more have accounted for the entire growth of the Union’s work force. The Union advocates that women have equal access to education and training.

In 1994, 14,5% of women with no qualifications beyond basic schooling were unemployed (men 12%), and just over 7,5% of the women with university degrees or the equivalent were unemployed (men 5,5%).

Education therefore is not sufficient to overcome apparent discrimination. Prospects for women’s employment in relatively low skilled activities such as sales and general services are, in fact, better than for men, but while growth in these areas may help to absorb the large numbers of women unemployed, whether openly or hidden, there is also a need to increase the opportunities for women in middle and higher level jobs.

In 1994 only 5% of women in employment were classified as managers, as opposed to 8,5% of men. Just under 16% of women worked as tecnicians as against just under 12% of men, and a slightly higher proportion of women than men were classed as professionals.

Overall, therefore, proportionately more women than men are in jobs likely to require relatively high skills. At the same time more detailed studies suggest that a much smaller proportion of these women than men work in private business as opposed to the public sector –in education, for example– and that, in general, their level of authority and responsibility tends to be lower than that of men.

In almost all countries of the Union participation rates of women of 15 to 24 in education and training are similar to those of men, though fewer study science, engineering and technology–related subjects. But equality in education does not automatically mean equality in access to jobs commensurate with their skills. Women who leave the labour market when they have children face particular problems when they return.

A savings bank in Denmark in which 57% of staff were women, but only 5% of whom held serious managerial posts as against 93% who were secretaries, introduced training courses for women wanting to become managers. The aim was to overcme perceptions of career advancement being an "all or nothing process" and to help women define a long term career plan, combining the company’s needs with their personal circumstances. In a few years, the number of women managers has increased to 20%.

Reduced Working Time as a Means of Increasing Employment

A widespread, though very gradual trend is towards greater flexibility in working time arrangements. This has been accompanied by a growth of part–time working, a reduction in the standard full–time week and (in some countries) the introduction of career break options.

Though the precise impact on jobs is hard to estimate, average hours have tended to decline over the long–term in the Union and this has contributed to increasing or maintaining the total number of people in employment. Between 1985 and 1990 average hours worked declined from just under 40 per week to 39. In the years of recession from 1990 to 1994 the rate of reduction was less.

In many countries there has been an increased focus on part–time working. While in many cases basic conditions of employment may not be greatly inferior to those for full–time workers, it is, nevertheless, the case that part–time employees may be penalised in a number of ways, such as in terms of their career prospects or exercising their trade union rights.

The occurence of part–time work differs per country: 36,5% in the Netherlands, whereas in Spain, Italy and Portugal it still represents under 8% of employment.

The growth of part–time working raises a number of issues to do not only with reductions in working time and work–sharing, but also with the terms and conditions of employment attached to such jobs and the status of the people taking them. From one perspective, part–time jobs are a means of enabling women especially but also some men to more easily reconcile family responsibilities with working careers. From another perspective, they represent inferior jobs with limited career prospects which are taken up o nly because those concerned have no alternative option. In 1994, two–thirds of all women working part–time were doing so because they did not want a full–time job, though only one–third of men.

Unemployment of Young People

Despite the efforts made in the last decade, the rate of youth unemployment in the Union was in 1995 not much different, at over 20% for both men and women, from the level reached in the mid–80s. Rates in Spain (42%) and Italy (34%) remain extremely high, as they do in Finland, France and Greece (all over 25%).

There remains a serious problem of youth unemployment in the Union, and in most countries it relates to the 20 to 24 age group.

Long–term Unemployment

The scale of long–term unemployment has not changed greatly overthe past decade. In 1994, almost half (48%) of those unemployed had been out of work for a year or more, and more than half of these for two years or more.

Apart from Italy and Greece, more than elsewhere, it is particularly a problem of the young, long–term unemployment affects older members of the labour force more than younger ones. Of the unemployed in the Union aged between 55 and 59 in 1994, 55% had been so for a year or more, and almost two–thirds of them had been looking for a job for at least two years.

Poverty and Social Exclusion

Data on poverty and social exclusion are in many cases not available or of only limited comparability. In 1989 the Council of Ministers adopted a resolution on combating social exclusion. An "Observatory on National Policies to combat social exclusion" was created by the European Commission, and an annual report is produced by independant experts, to study the efforts of Member States.

In the second annual report, social exclusion is defined in relation to social rights of citizens. "Within the countries of the EU, it is generally taken for granted that each citizen has the right to a certain basic standard of living and to participate in the major social and occupational institutions of the society. This right may or may not be expressed in legal terms; it may or may not be rooted in custom and tradition; and it may be precise or only vague in its formulation."

Social rights are not the same across the member states. Nor do rights remain the same over time. During recent years many governments have changed social security legislation and increased the use of means–tested benefits, carrying the risk of stigma, and discretionary benefits, where the element of rights is much weaker.

The estimate is that across the European Union more than 52 million people (15%) people live in poverty. In 1989 the European Council defined poor people as "those whose resources (material, cultural and social) are so low that they are excluded from the minimum acceptable ways of life in the Member State where they live".

In 1995 the European Commission in its report on the Poverty 3 programme referred to estimates of poverty in the member states around the year 1988, based on research done by the Erasmus University Rotterdam. The research estimates how many households live under the threshold of 50% of the average income. It is stressed that the information was prepared before the unification of Germany, and for years in which there was economic growth and jobs were created. Since this date, poverty has certainly increased.

* Before the unification
The Second Annual report of the Observatory on National Policies to combat social exclusion examines among other things the risk for social exclusion of specific population categories.

Eldery People

The report says that there is good evidence that because of improvements in occupational and state pension schemes the elderly form a declining proportion of the low income population in most EC countries. Despite this general improvement, some older people remain relatively neglected by the existing welfare systems. This is true in particular of women. However, the pattern of neglect varies significantly between countries.

The report points at two developments which could increase the risk of neglect faced by elderly people at the hands of welfare systems. First, the high unemployment of the 1980s is likely to produce a new generation of pensioners among whom significant numbers will have incomplete insurance contribution records. In their retirement, the long–term unemployed of today will continue to be disadvantaged relative to their contemporaries.

Second, the ageing of the elderly population will become even more pronounced over the next 20 years or so. This has two consequences: growing pension costs, and increasing numbers of old people requiring long–term social care, which in many countries is underdeveloped.

People With Disabilities

Detailed information about people with disabilities varies greatly between countries.

People with disabilities are at considerable risk of becoming socially excluded: in part because of inadequacies in social care services, in part because of barriers to labour market participation.

Some countries stipulate quota of jobs which are reserved for (partially) disabled people. In others the emphasis is upon employers to take people with disabilities into ordinary jobs. In general these schemes seem to be ineffective.

Women

Women tend to be confined within low paid jobs; and most of them enjoy less social protection than men. They are more likely to be confined at home, caring for the very young and the very old, especially as policies for the elderly increasingly stress the role of "community care" and take for granted that the burden of this can fall on those with informal carers, mostly women.

These disadvantages must be understood as being in part the result of the major social, fiscal and employment policies in these fields. In some countries the tax system discriminates against earnings by married women; and the social welfare system can also create disincentives for married women to work. So can childcare costs, and the non–availability of childcare facilities.

Women are over represented among single parents, a population group at considerable risk of being on low incomes.

Migrants and Ethnics Minorities

Migrant workers and their families within the EU countries enjoy rights –or suffer from a lack of rights– depending primarily upon their nationality. EU nationals will increasingly enjoy the same formal rights as citizens of the host country; legal immigrants from outside the EU have much more restricted rights; clandestine immigrants have the fewest. Corresponding to this graduation of rights, such migrants and their families will be –and are– exposed to insecurity in the whole range of social policies.

The second annual report on social exclusion in 1992 mentions some examples of discrimination and disadvantage:

* In Italy, immigrants are excluded from public housing, although some regions include them if they have been legally resident in Italy for at least one year; in Rome almost one fifth of immigrants are homeless. Many are not registered for health care and end up using hospital emergency services.

* In the UK, unemployment rates for minority ethnic workers in 1990 were higher than those for whites, although they had been falling at a faster rate since 1986. Unemployment among West Indian or Guyanese men, for example, fell from 26% in 1986 to 13% in 1990; but it remained nearly double the rate for all men, which was 7%.

Clandestine immigrants are, almost by definition, excluded socially and in many other ways. Without social security and concentrated in the black economy, these people have fewest prospects within the host country. During the 1990s policy debates in relation to migration are likely to be dominated by concern over clandestine immigration from poorer countries outside the European Union. For some in the European Union this is seen as a threat to the existing are "social order", and xenophobic attitudes become more common.

In the beginning of the 90s national policies in some countries appeared to oscillate between repression and amnesty. There are also now more active deportation procedures in some countries, with little right to appeal.

With substantial increases in the numbers of people seeking asylum, new measures to control asylum have been introduced by governments and new controls on fraud have been proposed and adopted in several countries.

Written by Novib Contains facts and conclusions drawn from two reports: Employment in Europe, 1995; published by the Directorate General V for Employment, Industrial Relations and Social Affairs of the European Commission. Observatory on national policies to combat social exclusion; second annual report; by G. Room and others, published by the Directorate General V for Employment, Industrial Relations and Social Affairs of the European Commission.