The Belgian and Irish problem and the regions where the recession never ended

As we face the prospect of a recession once again, it is instructive to look back at how quickly countries in Europe recovered from the last recession and what proportion of households were left behind.

If we take GDP per inhabitant (at equivalent purchasing power parities) as our measure of economic well-being, then the lowest point in the last recession came in 2008. How long did it take for the European Union’s (EU’s) 270 regions to recover from that point?

The most curious fact was that six regions in Poland and the French Island of Corsica never experienced the recession at all. Their economies just kept on growing. It is also important to note that, by 2011, half of the EU’s regions had recovered their position to be at, or above, their 2008 level. But, for the rest, recovery was slow – and even by 2017 a total of 22 EU regions had still not grown back to their 2008 position.

So who still lagged behind by 2017? 12 of these most ailing regions were in Greece, four in Italy and three in Spain.

But that is not the end of the story. By 2017 not even every thriving region had a universal picture of improving affluence. In many regions many people were left behind. One way to look at this is to measure the level of work intensity amongst adults in households – excluding those occupants in full-time education or retired. Low intensity means that less than 20% of available hours were worked in the household over the previous 12 months.

Looked at in this way, the social and economic landscape of the European Union looks very different. Low work intensity for the whole of the EU accounted for just over 10% of households. But if we concentrate on cities, then low work intensity was highest in Belgium and Ireland (over 20% and 15% of households respectively). Low work intensity in rural areas was highest in Bulgaria (well over 20%), Spain, Croatia and, once again, the Irish Republic. Finally, if we look at smaller towns and suburbs, low work intensity was highest (again) in the Irish Republic and Greece.

By sharp contrast, the most industrious households in cities could be found in Slovakia, in rural areas the Czech Republic, France and the Netherlands and in small towns and suburbs across Malta, Lithuania, Poland and Estonia.

Clearly, although the European Union is a huge space committed to economic growth, social solidarity and parity in living standards its reality falls far short of its political leaders’ aspirations. It failed to ensure the quick recovery of around half of its regions after the last recession and, more recently, lives with an unacceptable level of inactivity in its midst – including, ironically, Belgium, where the EU institutions are principally based. There are also countries, such as the Irish Republic, that on the surface seem to be thriving, but where – in truth – the economic reality appears to be no different from a developing country, such as India. Where people are in work, they are productive and well paid, but for a very substantial minority – especially in the west and north of the Republic – the Irish tiger has growled far off and to no effect.

According to Robin Chater, Secretary-General of the Federation of International Employers (FedEE), “The European Union’s regional policy has simply not worked. Where people have been industrious – as in Poland – the state of the world economy has hardly affected them at all, but (for all their fine words) the EU authorities seriously lack the competence to combat lagging growth and household poverty. This has not just been in failing economies like Greece, but in the heartland of Europe. In fact, what the EU and many of its Member States are now doing, by cranking up a narrow conception of job protection and removing flexible employment practices, will only make the situation far, far worse.

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