Austerity Had Uneven Effects on Europe’s Social Welfare Policies

Austerity Had Uneven Effects on Europe’s Social Welfare Policies

Portugal and other European nations have seen their social safety nets stretched following the eurozone crisis and years of austerity measures. In an email interview, Arne Heise, a professor of economics and director of the Center of Economic and Sociological Studies at Hamburg University, discussed the eurozone crisis’s impact on European social welfare policies.

WPR: Which European social programs have experienced the greatest impact from austerity measures?

Arne Heise: Almost every European Union member state had to implement changes to their economic policies after the 2007 global financial crisis. However, the size and concrete types of measures taken were very different across the EU. What is common across the union is that everywhere public expenditure cuts have been more pronounced than tax increases, and almost everywhere spending cuts and tax increases have been regressive, burdening lower-income households relatively more. And since social spending has a big share in overall government spending in the EU, social expenditure cuts are important across the union. But different countries have focused these cuts differently: While Greece saw cuts in almost every social policy area, including pensions, health and unemployment benefits, as well as a marked reduction in public employment and public wages, Portugal made more cuts to unemployment benefits and pensions, and Spain primarily cut health and unemployment spending.

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