Page 220 - ePaper
P. 220
Employment and Social Developments in Europe 2014
Chart 24: Trends in public debt to GDP ratio (1996–2013)
Dispersion Changes
0.6 200
1999-08 2008-11 2011-12 1999 2012
150
0.5 100
50
0.4 0
-50
0.3 -100
EU-28
EA-18
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 EE BG LU LV RO LT SE DK CZ SK PL FI HR SI MT NL AT DE HU UK FR ES BE CY IE PT IT EL
Source: Eurostat, calculations DG EMPL.
Note: Some missing data at the beginning of the period were kept constant for the calculation of dispersion BG (1995-97), HR (1995-01).
Reading note: Dispersion measured as the coefficient of variation, based on the EU-28 weighted average.
the first years of the crisis and some United States (convergence came to a an important source of divergence across
stabilisation since then, but within the halt in the EU). Member States, since strong dispersion in
context of a significant average increase skill levels persists, especially among the
in public debt. These divergent socioeconomic trends young (also see Chapter 2 of this report).
after 2008 concentrated mainly within
2.3. Conclusion: EU-15 and reflect the exceptional scale 3. Convergence
promoting upward and impact of the crisis in a context within the EU,
convergence by balanced where the adjustment capacity in the a specific challenge?
adjustment efforts euro area was wanting (see Section 2.1).
and strengthening human But they also reflect the consequences The persistent divergent socioeconomic
capital formation of the build-up of structural imbalances cyclical developments across the euro
that had taken place prior to the crisis, area since the onset of the crisis, sug-
While socioeconomic convergence had notably divergent nominal unit labour gest that the current E(M)U frame-
been ongoing across the EU over the last cost growth in the euro area, low pro- work, could be strengthened to foster
two decades, it came to a halt with the cri - ductivity growth in several Member upward convergence in times of cyclical
sis in terms of GDP per head and reversed States, and the rising indebtedness of downturn ( ).
24
strongly for employment and unemploy- households, enterprises and the public
ment rates. Activity rates, which held up sector in many Member States. While In particular it is important to consider
during the crisis, broadly continued to this correction led to a cyclical recovery the extent to which cross-border effects
converge. Convergence slightly reversed in productivity growth in Member States arising from labour market and social
in terms of household incomes and came such as Spain, it also led to deflationary adjustments are likely to intensify in the
to a halt in terms of poverty. These trends tendencies in Member States such as future, how such developments might
were mainly due to adverse develop- Greece, Cyprus and Portugal. Further- impact on the goals of upward conver-
ments in southern and peripheral EU-15 more, the correction has not been dis- gence, and whether a fiscal capacity at
Member States, which translated into an tributed symmetrically across Member the EMU level could mitigate any nega-
overall increase in the share of dispersion States, notably with respect to nominal tive effects.
between zones. Conversely, convergence unit labour cost growth. It was primar-
(within EU-13 and with the EU-15) broadly ily the Member States that had expe- There is a need to look beyond traditional
continued for most Member States that rienced higher than average growth in macro-economic adjustment channels
joined the EU in 2004 or later. nominal unit labour costs in the run-up and also consider socioeconomic devel-
to the crisis that made the strongest opments, such as changes in labour mar -
In comparison, adjustments in the cri- downwards adjustments, while adjust- ket polarisation and hysteresis effects,
sis were more balanced in the United ment in the Member States that had that risk deepening and extending the
States than in Europe, with convergence recorded below average growth was duration of any economic downturns.
(between States or regions) in GDP per rather moderate.
capita recovering slightly more quickly
after the crisis in the United States, More positively, the convergence in labour ( ) Such ideas go back to the early discussions
24
unemployment rates not diverging in force education levels and in the share of on optimal currency areas, with Mundell
(1961) emphasising the need for price
the United States, (they diverged sig - early school leavers was not interrupted flexibility and labour mobility, and Kenen
nificantly in the EU) and poverty rates by the crisis. However, it seems that (1969) the need for fiscal integration for
smoothening adjustment to asymmetric
still showing signs of convergence in the human capital formation risks remaining shocks.
218
Chart 24: Trends in public debt to GDP ratio (1996–2013)
Dispersion Changes
0.6 200
1999-08 2008-11 2011-12 1999 2012
150
0.5 100
50
0.4 0
-50
0.3 -100
EU-28
EA-18
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 EE BG LU LV RO LT SE DK CZ SK PL FI HR SI MT NL AT DE HU UK FR ES BE CY IE PT IT EL
Source: Eurostat, calculations DG EMPL.
Note: Some missing data at the beginning of the period were kept constant for the calculation of dispersion BG (1995-97), HR (1995-01).
Reading note: Dispersion measured as the coefficient of variation, based on the EU-28 weighted average.
the first years of the crisis and some United States (convergence came to a an important source of divergence across
stabilisation since then, but within the halt in the EU). Member States, since strong dispersion in
context of a significant average increase skill levels persists, especially among the
in public debt. These divergent socioeconomic trends young (also see Chapter 2 of this report).
after 2008 concentrated mainly within
2.3. Conclusion: EU-15 and reflect the exceptional scale 3. Convergence
promoting upward and impact of the crisis in a context within the EU,
convergence by balanced where the adjustment capacity in the a specific challenge?
adjustment efforts euro area was wanting (see Section 2.1).
and strengthening human But they also reflect the consequences The persistent divergent socioeconomic
capital formation of the build-up of structural imbalances cyclical developments across the euro
that had taken place prior to the crisis, area since the onset of the crisis, sug-
While socioeconomic convergence had notably divergent nominal unit labour gest that the current E(M)U frame-
been ongoing across the EU over the last cost growth in the euro area, low pro- work, could be strengthened to foster
two decades, it came to a halt with the cri - ductivity growth in several Member upward convergence in times of cyclical
sis in terms of GDP per head and reversed States, and the rising indebtedness of downturn ( ).
24
strongly for employment and unemploy- households, enterprises and the public
ment rates. Activity rates, which held up sector in many Member States. While In particular it is important to consider
during the crisis, broadly continued to this correction led to a cyclical recovery the extent to which cross-border effects
converge. Convergence slightly reversed in productivity growth in Member States arising from labour market and social
in terms of household incomes and came such as Spain, it also led to deflationary adjustments are likely to intensify in the
to a halt in terms of poverty. These trends tendencies in Member States such as future, how such developments might
were mainly due to adverse develop- Greece, Cyprus and Portugal. Further- impact on the goals of upward conver-
ments in southern and peripheral EU-15 more, the correction has not been dis- gence, and whether a fiscal capacity at
Member States, which translated into an tributed symmetrically across Member the EMU level could mitigate any nega-
overall increase in the share of dispersion States, notably with respect to nominal tive effects.
between zones. Conversely, convergence unit labour cost growth. It was primar-
(within EU-13 and with the EU-15) broadly ily the Member States that had expe- There is a need to look beyond traditional
continued for most Member States that rienced higher than average growth in macro-economic adjustment channels
joined the EU in 2004 or later. nominal unit labour costs in the run-up and also consider socioeconomic devel-
to the crisis that made the strongest opments, such as changes in labour mar -
In comparison, adjustments in the cri- downwards adjustments, while adjust- ket polarisation and hysteresis effects,
sis were more balanced in the United ment in the Member States that had that risk deepening and extending the
States than in Europe, with convergence recorded below average growth was duration of any economic downturns.
(between States or regions) in GDP per rather moderate.
capita recovering slightly more quickly
after the crisis in the United States, More positively, the convergence in labour ( ) Such ideas go back to the early discussions
24
unemployment rates not diverging in force education levels and in the share of on optimal currency areas, with Mundell
(1961) emphasising the need for price
the United States, (they diverged sig - early school leavers was not interrupted flexibility and labour mobility, and Kenen
nificantly in the EU) and poverty rates by the crisis. However, it seems that (1969) the need for fiscal integration for
smoothening adjustment to asymmetric
still showing signs of convergence in the human capital formation risks remaining shocks.
218
