EU faces ongoing challenges as report highlights growing divergence between and within EU countries

(Dublin, Ireland): Growing differences between and within EU Member States are revealed in Eurofound’s new yearbook, Living and Working in Europe 2012, which provides an annual snapshot of the state of living and working conditions across Europe. As the impact of the economic crisis continues, the divergence between ‘core’ and ‘peripheral’ euro zone countries is increasingly apparent according to the report.  In those countries most affected by the economic crisis, for example, substantial numbers of people report great difficulty in making ends meet.  These countries also show a greater decline in trust in public institutions, particularly national governments. In general, citizens also report more tension between rich and poor and between racial groups. The EU has responded to this crisis with a multi-faceted policy drive – one that Eurofound works to inform, monitor and support at policymaking level.

The EU and its citizens faced enormous challenges in 2012 as the limited economic recovery of the previous year stalled, GDP fell and unemployment began to grow again. Governments in many Member States were caught between the need to cut spending to control public debt and at the same time provide more support to citizens.

The overall deterioration in employment at EU level belies considerable divergence across Member States, especially between ‘core’ and ‘peripheral’ euro zone countries. In December 2012, unemployment stood at 27% in Greece and 26% in Spain. But labour markets in Austria and Luxembourg have been largely unaffected by the crisis, and unemployment barely ever rose above 5% in either.

As in previous years, the manufacturing sector was a major source of job loss, accounting for 36% of announced job losses in the first half of 2012, reversing the slowdown in job cuts in 2011. However, some manufacturing subsectors showed resilience, and over a third of new jobs announced were in manufacturing, mostly in higher-tech sectors – computers, electronics and communication equipment as well as the automotive industry.

The destruction of employment has been strongly polarising in terms of the distribution of jobs when considering wages. It has led to the elimination of mid-paying and mid-low-paying jobs and a shift towards high-skilled, white-collar employment. This contraction in the middle was accentuated in particular during the peak of the financial crisis (2008–2010) primarily as a result of huge falls in employment in construction and manufacturing. The strongest relative growth in this period was in higher-paying jobs, mostly in publicly funded services (health, education and public administration).

Living and working in Europe 2012 depicts a region experiencing fracture across economic, geographic and social boundaries – between core and peripheral states in the EU, between insiders and outsiders in the labour market, between workers with good jobs and workers with poor jobs in the workplace, between haves and have-nots in society. This current course of division weakens the European Union, and only by reversing it can the goal of deeper integration to address the crisis of the last four years be achieved. As the EU has responded to the crisis and to growing divisions within Europe, Eurofound has worked to inform, monitor and support the policymaking response.

Download the report Living and Working in Europe 2012 or read a summary.

For further information, contact Måns Mårtensson, Eurofound’s media manager, on email, telephone: +353-1-204 3124, and mobile: +353-876-593 507.