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Across wintry Europe, the spectre of creeping poverty

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An Europe darkened. The ESDE 2012 has said that the large unemployment shocks experienced at the beginning of the crisis and the rising shares of the long-term unemployed point towards serious risks of long-term exclusion faced by a significant share of the population.

An Europe darkened. The ESDE 2012 has said that the large unemployment shocks experienced at the beginning of the crisis and the rising shares of the long-term unemployed point towards serious risks of long-term exclusion faced by a significant share of the population.

Five years of economic crisis and the return of recession has pushed unemployment in Europe to new peaks not seen for almost twenty years. Household incomes have declined and the risk of poverty or exclusion is on the rise, especially in Southern and Eastern Europe, according to the 2012 edition of the Employment and Social Developments in Europe Review.

This, the second edition of the Employment and Social Developments in Europe (ESDE), has been released by the European Commission’s Directorate-General for Employment, Social Affairs and Inclusion. The 2012 Review builds on the integrated approach to employment and social analysis embarked upon in the first ESDE Review of 2011 which did very well to concentrate on cross-cutting themes covering employment, in-work poverty, wage polarisation and income inequalities.

In the Baltic States, Bulgaria, Greece, Hungary, Italy, Malta, Poland, Portugal and Romania the risk of entering into poverty among the population aged 16 to 64 is associated with few chances to get out again, meaning that individuals falling into poverty have limited chances to get back out of it in the following years. Among these countries, this situation is most worrying in Bulgaria, Romania, Estonia, Greece, Malta, Portugal and to a certain extent Italy. Graphic: EU-ESDE 2012

In the Baltic States, Bulgaria, Greece, Hungary, Italy, Malta, Poland, Portugal and Romania the risk of entering into poverty among the population aged 16 to 64 is associated with few chances to get out again, meaning that individuals falling into poverty have limited chances to get back out of it in the following years. Among these countries, this situation is most worrying in Bulgaria, Romania, Estonia, Greece, Malta, Portugal and to a certain extent Italy. Graphic: EU-ESDE 2012

The ESDE 2012 has said that “impact of the crisis on the social situation has now become more acute as the initial protective effects of lower tax receipts and higher levels of spending on social benefits (so-called ‘automatic stabilisers’) have weakened”.

This means, the ESDE has added, that a new divide is emerging between countries that seem trapped in a downward spiral of falling output, fast rising unemployment and eroding disposable incomes and those that have so far shown good or at least some resilience. [The link to the full report [pdf 23 MB] is here.]

The situation has been described as “especially catastrophic in southern and eastern European countries” by the website of the International Committee of the Fourth International (ICFI). Previously, only wars have devastated national economies so thoroughly in such a short time as have the austerity measures of the European Union, the ICFI has observed.

This scene, as if from another age of blithe consumption in Europe, is now more likely to be found (instead of in Berlin where I took the picture) in the metropolises of Asia

This scene, as if from another age of blithe consumption in Europe, is now more likely to be found (instead of in Berlin where I took the picture) in the metropolises of Asia

Indeed the ESDE findings are a deep shade of gloom. The average EU unemployment rate climbed to almost 11%. The report confirms a new pattern of divergence, which is most striking between the North and the South of the eurozone. The unemployment rate gap between these two areas was 3.5 points in 2000, fell to zero in 2007 but then has widened fast to 7.5 points in 2011.

Despite the social catastrophe they have provoked with their austerity policies, European governments are intent on tightening the fiscal screws. They are no longer limiting themselves to the periphery of the euro zone, but are ever more ferociously attacking the working class in the core countries. In Greece and Spain, one in four is officially unemployed, and over half of all young people have no work.

Average household income has fallen by 17 percent in Greece over the past three years and by 8 percent in Spain. The health care, pension and social security systems face total collapse. And yet new, draconian austerity plans have been drawn up for Italy, France and Germany. In Britain, where almost a quarter of the population already lives in poverty, the Cameron government is systematically dismantling the National Health System, public education and social welfare.

Grain and poverty, Russia and India, yet another UN talkfest, and those damned bankers

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Many young male adults have left their villages in search of subsistance means after the poor raining season in 2009 prevented them from harvesting. In the village of Garin Dagabi, north of Tanout in Southern Niger, the population at the beginning of 2010 was mainly made of old people, women and children. Photo: © Anne Isabelle Leclercq/IRIN

Many young male adults in Southern Niger have left their villages in search of subsistance means after the poor raining season in 2009 prevented them from harvesting. Anne Isabelle Leclercq/IRIN

At the United Nations headquarters in New York, USA, a large gathering of country representatives and other interested folks is the signal that another interminable, obfuscatory, filibustering, mostly spineless and generally pointless meeting is under way.

It is called the 19th Session of the UN Commission on Sustainable Development. The well-coiffeured ladies, impeccably suited gentlemen, minor potentates and ‘development’ celebrities there will be arguing endlessly about the grammar and construction of the declarations they finalise so as to ensure that no-one commits to anything and that they all meet again as soon as possible to check on their progress at doing nothing noisily.

Naturally, they are beatifically unconcerned about nuisances such as rising food prices and crippling food inflation all over the world. If you want to punish yourself by wading through portentous paragraphs of high-minded gibberish, and get a taste of the UN’s legendary core competency – wasting our money on pomp and prolix puffery – go here.

Now that we can see the difference between the posers at UN HQ and the rest of the toiling masses, here are some indicators of the way the world food, agriculture and prices are moving in the summer of 2011.

Agriculture in Africa. Photo: FAOThe Wall Street Journal has said that expectations of surplus grain in Russia and India are driving speculation that the two producers might resume exports, as wheat prices soar. But deteriorating prospects for US and European wheat crops mean even the return of exports from Russia and India to world markets this year would be unlikely to lower prices.

Grain dealers in Russia are starting to move stocks to ports in the hope that the government will allow exports as early as July. The Kremlin banned exports last year after the worst drought in a century slashed Russia’s grain harvest by about a third to about 63 million metric tons, but hopes that farmers may reap as much as 90 million tons this year have prompted calls for an end to the embargo.

Even if the exports from these producers happen, said the WSJ report, they are unlikely to make up for a fall in output in the US and Europe. The impact of weather on wheat supplies has been fueling prices for the past 10 months, with the latest concerns about dryness stressing crops in the ground and excessive rainfall hindering planting in the world’s two largest exporters. Wheat prices have rallied more than 60% on the Chicago Board of Trade since June 30.

Thou Market, southern Sudan. Across the Sahel, women generate income from balanites seeds, which are about half oil and a third protein. After processing at home, they can be turned into many tasty items, including roasted snacks and a spread not unlike peanut butter. They also supply a vegetable oil that is a prized ingredient in foods as well as in local cosmetics. (From 'Lost Crops of Africa: Volume III: Fruits', The National Academies Press. Photo: Caroline Gullick)

Thou Market, southern Sudan. Across the Sahel, women generate income from balanites seeds, which are about half oil and a third protein. After processing at home, they can be turned into many tasty items, including roasted snacks and a spread not unlike peanut butter. They also supply a vegetable oil that is a prized ingredient in foods as well as in local cosmetics. (From 'Lost Crops of Africa: Volume III: Fruits', The National Academies Press. Photo: Caroline Gullick)

World rice production is forecast to rise 3% this year, according to a Bloomberg report quoting the FAOs’ Rice Market Monitor. This is based on expected better weather and government support for farmers. The 2011 rice harvest is estimated to climb to 720 million metric tons from 699 million tons, or 480 million tons on a milled basis compared with 466 million tons a year earlier, the FAO has said in report. Price gains for rice, a staple for half the world, have trailed those of other grains. Thai grade-B white rice has gained 6% in the past 12 months, compared with a 56% gain for Chicago wheat prices.

A business report in the Huffington Post highlights the conclusions of a very readable piece of journalism in the magazine Foreign Policy (written there by Frederick Kaufman). The primary danger of the indexes is that they fundamentally alter the food market by transforming key stapes into a financial asset that performs more or less like a stock. “The money tells the story,” the Foreign Policy article explained. “Since the bursting of the tech bubble in 2000, there has been a 50-fold increase in dollars invested in commodity index funds. To put the phenomenon in real terms: In 2003, the commodities futures market still totaled a sleepy $13 billion. But when the global financial crisis sent investors running scared in early 2008, and as dollars, pounds, and euros evaded investor confidence, commodities — including food — seemed like the last, best place for hedge, pension, and sovereign wealth funds to park their cash… In the first 55 days of 2008, speculators poured $55 billion into commodity markets, and by July, $318 billion was roiling the markets. Food inflation has remained steady since.”

In a report titled ‘Food Price Hike Worsens Poverty in Asia’, IPS news has reported that an annual meeting of Asian finance ministers and central bank governors in Hanoi is set to address the fate of 64 million people in the region on the brink of extreme poverty. They are the worst affected by soaring food prices, which have hit record highs in the first two months of this year. “The issue of food price inflation and food security will indeed be one of the key topics of discussion at the Asian Development Bank’s 44th annual meeting,” says Xianbin Yao, director general of the regional and sustainable development department at the Manila-based international financial institution. “(We hope) to focus our discussions on the long term structural adjustments that are needed to secure food supplies.

“If left unchecked, the food crisis will badly undermine the recent gains in poverty reduction made in Asia,” he said in an interview to IPS. “We estimate that a 10% rise in domestic food prices in developing Asia could push an additional 64 million people into poverty, based on the 1.25 (dollar) a day poverty line.” In a report released ahead of the annual meeting in the Vietnamese capital, to be held May 3-6, the Asian Development Bank (ADB) warned that this ascent of prices among many Asian food staples is “likely to continue” a threat to the continent’s nearly two billion people who live on less than two dollars a day.

A Christmas troika from the ILO

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Three excellent titles have been released by the International Labour Organization (ILO) since November, the Global Wage Report 2010-11, World Social Security Report 2010-11 and Extending Social Security to All.

Global Wage Report 2010-11. Social security represents an investment in a country’s “human infrastructure” no less important than investments in its physical infrastructure. At an early stage of economic development the priority is, of course, to put in place a basic level of provision; the evidence adduced in this Guide points to its affordability for, essentially, every country. While this message lies at the heart of the Guide, it is important to keep in mind that, at a later stage, the basic level can and should be augmented, and the ILO’s long-standing approach to social security offers the framework to do so.

While the financial, fiscal and economic affordability and sustainability of social protection systems has become – rightly or wrongly – a major concern for countries at all stages of economic development, the Guide provides testimony showing that some level of social security can be afforded even at early stages of national development. Social security systems remain affordable moreover when economies mature and population age. Hence, a country’s national investment in social security can be well justified, whether or not an extensive social security system has already been developed.

More on the title here. Get the pdf here.

World Social Security Report 2010-11. This is the first in a new series of biennial reports that aim to map social security coverage globally, to presenting various methods and approaches for assessing coverage, and to identifying gaps in coverage. Backed by much comparative statistical data, this first report takes a comprehensive look at how countries are investing in social security, how they are financing it, and how effective their approaches are. The report examines the ways selected international organizations (the EU, OECD and ADB) monitor social protection and the correlation of social security coverage and the ILO Decent Work Indicators. The report’s final section features a typology of national approaches to social security, with a focus on countries’ responses to the economic crisis of 2008 and the lessons to be learned, especially concerning the short- and long-term management of pension schemes.

Social security systems play a critical role in alleviating poverty and providing economic security, helping people to cope with life’s major risks and adapt to change. They can have a remarkable effect on income inequality and poverty in developing countries through income transfers. The 2008-09 financial crisis has shown that they are also powerful economic and social stabilizers, with both short- and long-term effects. However, there are serious problems of access to social security around the world which the crisis has shown into sharp relief, and the financing of systems has been put at risk by shrinking national budgets.

More on the title here. Get the pdf here.

Extending Social Security to All. The second in a series of ILO reports focusing on wage developments, this volume reviews the global and regional wage trends during the years of the economic and financial crisis of 2008 and 2009. In Part I, the report highlights the slow down in the growth of monthly average wages as well as some short-term fluctuations in the wage share. These changes happened against a backdrop of wage moderation in the years before the crisis and a long-term trend of rising wage inequality since the mid-1990s. Part II of the report discusses the role of wage policies in times of crisis and recovery. Collective bargaining and minimum wages can help achieve a balanced and equitable recovery by ensuring that working families share in the fruits of future economic growth.

At the same time, preventing the purchasing power of low-paid workers from falling can contribute to a faster recovery by sustaining aggregate demand. The report shows that policy strategies and design are crucial to ensure that low-paid workers benefit from union representation and minimum wages, and argues that wage policies must be complemented with carefully crafted in-work benefits and other income transfers. Part III concludes with a summary of the report and highlights issues that are critical for improving wage policies.

More on the title here. Get the pdf here.

Reforme des retraites

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“Pension reform,” is the cry in France. This cartoon in the Süddeutsche Zeitung (by Wolfgang Horsch) says it well. The excellent Presseurop summarises the coverage by the French press. Between 1.1 and 3.5 million French (according to the source) demonstrated on 19 October against the government’s retirement reform.  For Libération, “Sarkozy is caught in the trap of the street” with a new poll suggesting that 79% want the new law to be renegociated. For Le Figaro, on the other hand, “The unions are caught in a trap”. The conservative daily focuses heavily on acts of hooliganism that occurred during the marches and considers that the movement is running out of steam.

Written by makanaka

October 21, 2010 at 10:52

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Billions of euros, and the zero-rupee note

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The German weekly newspaper, Die Zeit, is easily among the best designed papers in the world. It is also consistently critical in its investigations and reporting, and just as consistently innovative in the manner in which it presents subjects. Visually, Die Zeit’s pages have few peers worldwide, if at all.

Billions swallowed up (Die Zeit, Deutschland)This is a typical example of how Die Zeit is able to hold its readers’ interest, dramatically present numeric data and at the same time make a strong political statement about state spending.

The title of this arresting full page graphic is ‘Seid verschlungen, Milliarden!’, which means ‘Billions swallowed up’. The graphic purports to be an aid to politicians who notoriously have no idea, says Die Zeit, how many zeros there are in a billion but who blithely continue to agree to spend billions (of public money).

There are some eye-popping numbers represented by the coloured squares on this page. The German healthcare system is 245 billion euro, the income of the church in Germany is 330 billion euro, Germany’s federal budget for ‘Bildung und Forschung’ (education and research) is 11 billion euro, Germany must reserve 283 billion euro for pensions (which is separate from the 36 billion euro to be spent on pensions for its government officials).

Billions swallowed up (Die Zeit, Deutschland)The cost of sending all children in developing countries to school for five years is reckoned to be 321 billion euro, the development aid of the richest developed/industrialised countries is 72 billion euro, the cost of halving the incidence of poverty in developed countries (as under the UN’s Millennium Development Goals) is 32 billion euro, the cost to the USA of the 2003 Iraq war was 40 billion euro, and the cost to date of the Iraq and Afghanistan war to the USA is 1,242 billion euro.

While on the subject of money and public spending, The Economist has reported the issue of the zero rupee currency note. The surprising note looks like the typical 50-rupee note, except it is for ‘zero rupees’. In place of ‘Reserve Bank of India’ it says ‘Eliminate Corruption at all Levels’ and in the same vein has replaced the usual “I promise to pay the bearer…” with “I promise to neither accept nor give bribe”. This excellent public campaign has been launched by a Chennai-based NGO called 5th Pillar (P O Box No 5338, Chennai 600024, phone +91 44 65273056).

The zero rupee noteVijay Anand is president of the NGO and is also, according to the Economist report, an expatriate Indian physics professor from the University of Maryland “who, travelling back home, found himself harassed by endless extortion demands. He gave the (zero rupee) notes to the importuning officials as a polite way of saying no.” 5th Pillar reportedly had 25,000 zero rupee notes printed and publicised to mobilise opposition to corruption. The idea caught on and the NGO says it has distributed a million zero rupee notes since 2007. Haven’t seen any in Mumbai though – although in Mumbai it’s at least a hundred that the most junior traffic policeman will settle for and for municipal jobs one starts with 500 rupees, so 5th Pillar will need to do a Mumbai and Delhi set of zero-rupee notes in those colours, not 50-rupee colours.