EU finance ministers to examine bloc’s ‘major social problems’

By Ian Wishart

Tackling unemployment and poverty should be a priority for European policy makers in order to cut public debt and boost growth, according to a paper to be discussed by European Union finance ministers.

The EU’s “major social problems” need addressing if the 28-nation bloc is to recover from the debt crisis it has faced over the past four years, the paper from the Brussels-based policy group Bruegel says.

“The economic crisis has led to a significant deterioration of the social situation in a number of European countries,” the paper’s authors write. Unemployment may “have lasting effects on income inequality for the next generation.”

The EU finance ministers’ gathering in Greece on April 1 and 2 takes them to the country whose debt mountain forced it into a bailout in 2010 and triggered turmoil across the region. While the euro area has now emerged from its longest-ever recession, unemployment remains at 12 percent, close to the record level it reached last year.

Governments should reform “inefficient” labor markets, introduce better training programs and improve how tax and benefit systems target those most in need, write authors Zsolt Darvas and Guntram Wolff in the paper obtained by Bloomberg News.

“There is scope for reducing government spending without undermining the achievement of goals in countries with inefficient welfare systems,” the report says.

Ministers will also discuss changes to the EU’s banking structure, rules for failing banks and long-term financing of the economy during their two-day meeting.

[Bloomberg]