Europe could have up to 25 million ‘new poor’ by 2025 if austerity drags on
Jonaid Jilani Press Officer
12th Sep 2013
Austerity policies are massively increasing poverty and inequality in the UK and across Europe - damage that will take two decades or more to reverse, according to a new report by Oxfam.
Oxfam's new report, A Cautionary Tale warns that 800,000 children and an extra 1.9 million adults in the UK could be pushed into poverty by 2020.
In Europe up to 25 million more people are likely to live in poverty by 2025 - equivalent to the combined population of the Netherlands and Austria. This would bring the number of poor people in Europe to 146 million, almost a third of the population, warns the international agency. It could take up to 25 years to regain the living standards people enjoyed five years ago.
Max Lawson, Oxfam's Head of Advocacy, said: "Austerity is making an already bad economic situation far worse in the UK and across large parts of Europe. Cuts to social security and public services are combining with falling incomes and rising unemployment to create a deeply damaging situation in which millions are already struggling to make ends meet.
The unprecedented rise in the number of Britons needing emergency aid from food banks is just one example among many of how poverty is on the march in the UK."
Ahead of tomorrow's EU Finance Ministers' meeting in Vilnius, Lituania, Oxfam is calling on European governments to champion a new economic and social model that invests in people, strengthens democracy and pursues fair taxation. Governments could raise billions for public services, such as health and education, by taxing the wealthiest and cracking down on tax dodging.
Unemployment in many European countries is hitting record highs. Women and young people are being hit hardest. In the UK, more than 1 million public sector jobs will be cut by 2018, affecting women more due to their comparatively higher representation in the public sector. Wages are falling fastest in countries facing the harshest austerity prescriptions. Almost one in ten working households in Europe now live in poverty and it could get much worse. For example, tough mortgage laws in Spain allow banks to evict 115 families from their homes every working day. Even those in work will be
significantly poorer than their parents. Child poverty across Europe is set to rise.
Three years on, leading proponents of austerity such as the International Monetary Fund are starting to recognise that these measures have not only failed to achieve their objective to shrink government debt, but have also increased inequality and stunted economic growth.
Lawson added: "The only people benefitting from austerity are the richest 10% who have seen their share of income rise whilst poorest have seen their share fall. The UK, Greece, Ireland, Italy, Portugal, Spain - countries that are most aggressively pursuing austerity measures - will soon rank amongst the most unequal in the world if their leaders don't change course."
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NOTES TO EDITORS
Oxfam's report A Cautionary Tale can be viewed here: www.oxfam.org.uk/austerity
· Oxfam's analysis is based on the EU's official definition of poverty (source). In 2011, there were 121 million people at risk of poverty in the EU representing 24.3 per cent of the population (source). The Institute for Fiscal Studies predicted that poverty rates in the UK would increase by between 2.5 and 5 percentage points among various
groups over 2010-2020 if austerity policies continued on current track (source). If the EU were to see a three per cent increase over the next twelve years to 2025, this would bring the number of people at risk of poverty to 14.963 million. If poverty rates were to increase by five percentage points across the EU this would represent an increase of 24.939 million.
· Bolivia witnessed an increase of 16 percentage points in its net income inequality (after taxes and social transfers) over a period of six years following its structural adjustment programme in the 1990s. Some countries have already experienced an increase in inequality since the implementation of austerity policies. If Greece, Ireland, Italy, Portugal, Spain and the UK saw an increase similar to Bolivia, their net inequality would rise to 0.47-0.51 points, making these countries amongst the most unequal in the world. The most recent estimate for Gini coefficients, which is an
indicator of inequality, in South Sudan and Paraguay is 0.45 (2009) and 0.52 (2010) respectively (source).
· Since the financial crisis hit five years ago, many of the countries deeply affected by austerity measures - Greece, Italy, Spain, Portugal and the UK - have seen one of two impacts: either the richest tenth of the population has seen their share of total income increase, or the poorest tenth has seen their share decrease. In some cases both impacts occurred. In other words, the richer are taking more, whilst the poor are taking less (source).
· In the UK and Portugal, real wages are reported to have fallen by 3.2 per cent over 2010-2012 (source). The real value of wages in the UK is now at 2003 levels, representing a lost decade for the average worker (source). Italy, Spain, and Ireland all recorded decreases in real wages over this period. Greece has recorded a fall in real wages of over 10 per cent (source).