European ministers take sobering look at social impact of crisis

Tue Apr 1, 2014 1:47pm EDT

Related Topics

* Study finds that economic crisis made 6 million unemployed

* Ministers told that young suffered most from spending cuts

* Think-tank sees growing gaps between rich and poor

By John O'Donnell

ATHENS, April 1 (Reuters) - The economic crisis in Europe has put 6 million people out of work and driven others into poverty, according to a think-tank study looking into the social impact of the slump that was examined by EU finance ministers for the first time on Tuesday.

As host, Greece, the first euro zone country to be bailed out during the crisis, put it on the agenda of the regular meeting of EU finance ministers that has more usually focused on appeasing financial markets with tough spending reforms.

The meeting was taking place a short distance from Syntagma Square, the focus of often violent clashes over austerity measures imposed under the country's bailout, although protests had been banned for this meeting.

After six years of recession that many blame on international lenders such as euro zone heavyweight Germany for exacerbating tax hikes and spending cuts, about a quarter of Greeks are jobless, including over half of those aged under 25.

The study presented to ministers by the influential economic think-tank Bruegel outlined how unemployment had risen to 11 percent of the European Union workforce last year, as governments slashed spending.

The axe fell hardest on the young, the study found, with children in families of the unemployed also bearing the brunt.

"The European Union faces major social problems," the study's authors said in the presentation. "More than 6 million jobs were lost from 2008-13 and poverty has increased."

"The distribution of adjustment costs between the young and old has been uneven; a growing generational divide is evident, disadvantaging the young," the study said.

The report also identified the wide disparities of wealth across the European Union, a shaky alliance of 28 countries which gather under the umbrella of the EU but who often clash due to their different cultures and interests.

Bruegel identified the largest gaps between rich and poor in Greece, Italy, Portugal, Spain and Britain. Along with Greece, Spain and Portugal have also been forced to seek emergency financial support from their neighbours.

The report also flagged the widening gap between rich and poor in southern European countries, arguing that some cuts to social spending could trap countries in economic gloom by creating, for example, a generation of long-term unemployed.

Guntram Wolff, one of the study's authors said that while the reaction of ministers was favourable, differences remained when it comes to addressing such problems.

"While all ministers agree that the issue is relevant there are very different philosophies throughout Europe," he said. (Editing by Alison Williams)

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