New EU rules supposed to get crisis economies back on track do nothing to solve the social crisis or to generate growth and jobs in the worst-hit countries such as Ireland, according to a report from Caritas, a Catholic charity which operates across Europe.
Using figures from OECD and IMF reports, it shows Ireland has suffered one of the biggest increases in unemployment since the start of the crisis, and claims that the official figures underestimate the reality.
Emigration has played a big role in keeping down the rate, and the report quotes one estimate, saying that if those who left the country remained, the unemployment rate here would be around 20%.
The IMF last year estimated that if discouraged workers and involuntary part-time workers were included, overall unemployment would have been above 24%.
The IMF said most new jobs coming onstream were part-time but that those taking them were looking for full-time work.
The OECD said that the labour force had declined by 6% — the largest among the 34 countries in the organisation — since the start of the crisis due to inactivity and increasing emigration.
While Ireland has a high unemployment rate among those aged 15-24 — put at 30.4% in 2012 — the OECD said that it was closer to 45% if involuntary part-time work and workers marginally attached to the labour market were taken into account.
While some of the country’s migration involves non-Irish returning home, emigration has had a significant impact, with the number of people aged 15-24 here decreasing 9% between 2007 and 2012, according to European Commission figures.
Ongoing austerity policies assume rightly, according to the report, that the crisis was caused by poorly regulated banks, but also blames government profligacy.
“This is certainly not the case in all the countries severely impacted by the crisis,” it states.
Most EU governments, including Ireland’s, were in line with the target of having budgets with a GDP deficit of no more than 3%; in other words, they were not spending more than they were taking in.
Their debt was also less than the 60% considered as the upper limit, the report says.
“Had the fiscal compact been in place prior to the crisis in 2007, six of the countries considered in this report would have been in compliance with the so-called deficit brake of 3% of GDP — Greece being the only exception,” the report says.
Extensive budget rules brought in under the fiscal compact treaty, which Ireland adopted when it passed a referendum in 2012, are actually preventing or slowing recovery in countries like Ireland, according to the report, as they are not allowing for the investment policies vital to creating growth and jobs.
The report points out that with an additional €2bn to be taken out of the economy in the budget for 2015, the total adjustment from 2008 will be approximately €33bn, equivalent to 18% of the country’s GDP as forecast for next year.