April 1, 2014 / 5:54 PM / 5 years ago

European ministers take sobering look at social impact of crisis

ATHENS (Reuters) - The economic crisis in Europe has put 6 million people out of work and driven others into poverty, according to a think-tank study looking into the social impact of the slump that was examined by EU finance ministers for the first time on Tuesday.

As host, Greece, the first euro zone state to be bailed out during the crisis, put the study on the agenda of a regular meeting of EU finance ministers that has more usually focused on appeasing financial markets with tough spending reforms.

The gathering was taking place a short distance from Syntagma Square, the focus of often violent clashes over austerity measures imposed by the terms of Greece’s bailout, although protests had been banned for this meeting.

Defying the ban, about 5,000 people gathered in central Athens earlier on Tuesday to protest against a new wave of reforms Greece passed this week to qualify for more bailout loans from the European Union and the IMF.

A few demonstrators tried to penetrate the cordoned off area around the meeting venue but police repelled them with tear gas.

After six years of recession that many blame on international lenders such as euro zone heavyweight Germany for exacerbating tax hikes and spending cuts, about a quarter of Greeks are jobless, including over half of those aged under 25.

The study presented to ministers by the influential economic think-tank Bruegel outlined how unemployment had risen to 11 percent of the European Union workforce last year, as governments slashed spending.

The axe fell hardest on the young, the study found, with children in families of the unemployed also bearing the brunt.

“The European Union faces major social problems,” the study’s authors said in the presentation. “More than 6 million jobs were lost from 2008-13 and poverty has increased.

“The distribution of adjustment costs between the young and old has been uneven; a growing generational divide is evident, disadvantaging the young,” the study said.

The report also identified the wide disparities of wealth across the EU, a shaky alliance of 28 countries that often clash due to their different cultures and interests.

Bruegel identified the largest gaps between rich and poor in Greece, Italy, Portugal, Spain and Britain. Along with Greece, Spain and Portugal have also been forced to seek emergency financial support from their neighbors.

The report further flagged the widening gap between rich and poor in southern European countries, arguing that some cuts to social spending could trap countries in economic gloom by creating, for example, a generation of long-term unemployed.

Guntram Wolff, one of the study’s authors, said that while the reaction of ministers was favorable, differences remained when it comes to addressing such problems.

“While all ministers agree that the issue is relevant there are very different philosophies throughout Europe,” he said.

Additional reporting by Angeliki Koutantou, Editing by Mark Heinrich

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