Report: EU fails to ease effects of austerity

Austerity may improve the look of government balance sheets but it continues to create poverty, and EU policies have failed to improve the wellbeing of millions of people, a report by Social Justice Ireland concludes.

It also makes a case for a greater tax take by the state, showing that countries such as Ireland with the lowest overall tax were worst hit by the economic crisis and have the greatest inequality and poverty levels.

It says that claims that higher tax make a country uncompetitive are not borne out by the facts as many with high tax are the world’s most competitive.

The study, ‘Europe: A Union for the Powerless as well as the Powerful?’, reviews the social situation across the EU, focusing on investment, work, tax, poverty and social inclusion.

It comes as the Government plans to cut taxes in next month’s budget despite opinion polls showing the public would prefer more spent on basic services.

Ireland’s total tax take, including Vat, income, imports, wealth tax, and social contributions, comes to around 30% of GDP, one of the lowest in the EU.

The report says countries with tax over 35% tend to have the most developed social investment approach, do better in preventing poverty and social exclusion and a little better at preventing joblessness. Poverty or social exclusion deteriorated most in Ireland and Greece from 2008 to 2013.

Launching the results, Social Justice Ireland director Seán Healy said: “During the crisis years, the EU has focused on fiscal consolidation and economic recovery as well as on protecting the euro and the banks; at the same time it has failed to address the social consequences of the austerity approach which is being used to resolve the problems caused by the crash.”

The report says Scandinavian and Central European countries tend to have higher levels of tax, people better protected from poverty and social exclusion, and lower unemployment rates, while countries in the south and periphery of Europe such as Ireland tend to have lower levels of tax, less well-developed social investment approaches, higher rates of poverty or social exclusion, and unemployment.

Michelle Murphy, research and policy analyst, said the EU was now further away from achieving the goals of a more fair and just society than it was in 2008 before the crisis, and did not appear to be making much progress to reverse this.

“There is, as yet, no integrated EU strategy that consistently and comprehensively promotes economic recovery while also protecting EU citizens especially those who are vulnerable and powerless,” said Ms Murphy. “This may lead to a healthy balance sheet but the lack of social inclusion and social cohesion has hugely negative impacts on millions of people in the EU.”

The report points to policies aimed at stabilising the euro and cutting government budget deficits as preventing the kind of investment needed in countries like Ireland to make the economy work for everyone.

However, the study conclude that, without raising resources, countries cannot invest in the infrastructure and the services required to promote inclusion and to sustain development.

The report sets out four core rights to improve the situation: Right to sufficient income; to meaningful work; to access quality services; and to greater representation of citizens in decision making.


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