THE STATE OF THE EUROPEAN UNION. Reforming Europe in a time of war

THE STATE OF THE EUROPEAN UNION 26 implemented during the euro crisis reported significant positive changes in their social indicators (Social Protec- tion Committee, 2021: 23f.). Following a collapse in disposable household in- come in Q2 2020, the short-time work schemes and social security systems quickly balanced and stabilised the situation. Special programmes, top-up benefits and extended eligibility for existing social welfare benefits in many Member States also helped, for example in rela- tion to sick pay, unemployment benefit, minimum wage, parental leave and child benefit. Similarly, an increase in social expenditure was reported in all Member States at the start of the pandemic.The impact of social protection and inclusion policies was clearly illustrated by the crisis. The lagging indicator of at risk of poverty or social exclusion remained relatively stable in the EU in 2020. A moderate increase of 0.4 percentage points to 21.5 per- cent was recorded compared to 2019 (euro area: an in- crease of 0.8 percentage points to reach the same value), although the rate fell in the majority of Member States. The at risk of poverty or social exclusion rate continues to be distributed highly unevenly across the EU: while it is at less than 15 percent in Czechia, Slovakia and Slovenia, the rate exceeds the EU value of 21.5 percent in Romania, Bulgaria, Greece, Spain, Italy and the Baltic states. It affects 94.7 million people in the EU as a whole. The vulnerability rate among children under the age of 18 increased by 1 percentage point to 23.8 percent in the EU; in the euro area, it increased by 1.5 percentage points to 24.2 percent – more than 19 million children in the EU are at risk of poverty or social exclusion. People with disabilities face also a higher risk compared to the total EU population: 28.6 percent of them are at risk of poverty or exclusion. As in the case of labour market performance, the pan- demic has made it clear that the majority of Europeans are well protected thanks to the social security systems and the rapid and comprehensive response to the crisis at Member State and European level. However, it has also become evident that certain groups are not afforded this resilience to crisis situations or are afforded only limited resilience. In addition to children and people with disa- bilities, migrants from non-EU countries are particularly affected by poverty or social exclusion: at 40.5 percent in 2022, the vulnerability rate among this group was almost double what it was among the EU population. Better protection for this and other vulnerable groups in the EU is therefore a high political priority.After all, the double green and digital transformation of the economy will mean that these groups will be under further pres- sure as a result of restructuring and will need support in the form of education, retraining or further training. This begins with the digital skills that were needed to make it possible to work from home during the pandemic; these skills were not sufficiently available in all age and social groups. However, this also affects public welfare for chil- dren and social protection for single parents, part-time employees and people who are not adequately prepared to participate in the labour market because they are early school leavers or have a migrant background and who are often among the groups particularly affected by eco- nomic crises. One area in which the exposure of vulner- able groups is particularly apparent is in the social costs of the energy transition, which are being increased by the war in Ukraine: 34 million people in the EU are al- ready affected by energy poverty (European Commission, 2022c), given the sharp increase in prices and the rapidly growing trend in 2022. There is a risk that exclusion will become embedded and will spread to groups that hith- erto managed to weather the crisis situation. Regional socioeconomic disparities in the EU During the euro crisis, the dangers of an asymmetric cri- sis management policy that relies primarily on austerity became clear. Some of the Member States that were se- verely affected by that crisis had not managed to achieve once again pre-crisis levels of economic growth and so- cial welfare by the time the pandemic began in 2020. Ultimately, there was a widening of divergences between the EU Member States in terms of socioeconomic devel-