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Austerity 'resembles sub-Saharan policies' of 1980s

A report from Oxfam on the impact of austerity in Europe makes for sobering reading.

Image: Shutterstock via Shutterstock

A REPORT ON austerity in Ireland has found that the country is likely to see rising inequality over the coming years.

The Oxfam report, ‘A Cautionary Tale: The true cost of austerity and inequality in Europe’, said that with inequality and poverty on the rise, “Europe is facing a lost decade”.

It also said that the austerity programmes brought in around Europe “bear a striking resemblance to the ruinous structural adjustment policies imposed on Latin America, South-East Asia, and sub-Sahara Africa in the 1980s and 1990s” and “cannot be allowed to happen again”.

The report looked at France, Germany, Greece, Iceland, Ireland, Italy, the Netherlands, Portugal, Spain, and the UK.

It said that the ‘idyllic social model of Europe’ has been under threat for some time, and now it is under attack from “ill-conceived austerity policies sold to the public as the cost of a stable, growing economy”.

It warned that “left unchecked, these measures will undermine Europe’s social gains, creating divided countries and a divided continent, and entrenching poverty for a generation”.

Poverty

In 2011, 120 million people across the EU faced the prospect of living in poverty, and Oxfam calculates this could rise by at least 15 million and as much as 25 million.

Women will be the hardest hit, said the report.

It says that in Europe in 2025, the countries most affected by austerity “will become the most unequal in the Western world”.

It imagines that there will be an erosion of collective bargaining and workplace rights, continuing an upward trend in working poverty. It also said that women will be particularly affected by declining levels of social security.

Cuts to public services will result in people losing their jobs, while voluntary institutions that support people in times of hardship will be weakened or even shut down through declining funding.

It could take between 10 – 25 years for poverty to return to pre-2008 levels.

Alternatives to austerity include the following, said Oxfam;

  • Invest in people and economic growth
  • Invest in public services
  • Strengthen institutional democracy
  • Tax fairly

It also said that European policy makers should:

  • Tackle unsustainable European public debt
  • Address major flaws in the financial system

In its conclusion, Oxfam said that:

Citizens in Europe and around the world need to increase their political engagement in order to influence government policy. We need to change course to avoid a lost European decade.

Ireland

Oxfam’s report on Ireland notes how after 14 years of ‘spectacular economic growth’ the country entered recession.

It detailed how the government was forced to turn to the European Central Bank, the European Commission and the International Monetary Fund (the Troika) for €67.5bn to finance the budget to recapitalise its banks.

It said that though the programme is ahead of target, the measures “have had a devastating impact on people already struggling with rising unemployment and levels of indebtedness”.

The report warned that the cuts to Ireland’s public sector and to levels of social welfare “are likely to seriously impact on its net income inequality over the long-term”.

The report said that the poorest are hit hardest by the recession, with a “shocking array of welfare cuts and tax increases” being introduced since 2008 “that have driven more and more people into debt and poverty”.

Unemployment has also risen, and the report stated that like many other European countries, “Ireland is stricken with the twin problems of youth unemployment and chronic long-term unemployment”.

This, it said, has meant that “many of Ireland’s young adults are planning to emigrate”.

Inequality

Oxfam said in its report that income inequality in Ireland is four times the OECD average, and so the country has undertaken “an enormous effort to redistribute incomes through taxes and social transfer”.

But although almost everyone has been affected by the austerity measures, “statistics would suggest that the top tier of society has been least hurt”.

Ireland is likely to see rising inequality over the coming years, said the report – despite success in cutting the budget – due to the financial crisis.

The full range of reports can be found at this link.

Read: Charities speaking in Leinster House have a bottom line: ‘No more cuts’>

Read: ‘Austerity hawks’ want to use Ireland as ‘economic experiment’ – Gilmore>

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