NCPA - National Center for Policy Analysis

Ranks of Working Poor Grow in Europe, Despite Social Safety Nets

April 6, 2012

As the height of the European debt crisis gradually passes and tensions cool, the European Union can look forward to what is likely to be a slow and painful recovery.  However, the pain caused by deficit-reducing austerity measures will likely be much more significant than many realize: a contraction of government services will hit Europe's poor hard, worsening an already-desperate situation, says the New York Times.

The poor of EU nations will face significant obstacles on this road to recovery, and this pain will not be isolated to those countries that are most in debt -- even France and Germany are discovering a striking amount of desperation among their working poor.

  • In 2010, 8.2 percent of workers in the 17 EU countries that use the euro were living under the region's average poverty threshold of 10,240 euros, or about $13,500 annual income.
  • The situation is nearly twice as bad in Spain and Greece.
  • This is up from only 7.3 percent in 2006, according to Eurostat.
  • As a point of comparison, the Labor Department estimated that 7 percent of single adult workers in the United States earned less than the poverty threshold of $10,830 in 2009.

France, which is second only to Germany in its aggregate level of prosperity, has seen a fundamental failure of its own generous social safety nets to protect the poor.

  • Slightly lower than the European Union average, France still faces a below-poverty rate of 6.6 percent for single workers.
  • Furthermore, half the nation's workers earn less than $25,000.
  • Even though the country's workers make more than most other workers in the European Union, they also face higher prices that diminish this advantage.
  • For example, the lack of affordable housing (home prices have surged 110 percent in the last decade) have left many homeless.

One of the obstacles that the EU's workers face is that traditional jobs, which include benefits and comprehensive compensation packages, are largely being replaced by inconsistent contract work.  In 2011, temporary contracts accounted for 50 percent of all new hires in the European Union, according to Eurostat.

The growing needs of the poor place greater pressure on government services just when EU governments are cutting back on those same services.

Source: Liz Alderman, "Ranks of Working Poor Grow in Europe," New York Times, April 1, 2012.

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