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Chart of the Day: Europe’s real problem – they don't work enough

And they don't work enough because the pensions and benefits on offer are just too generous in the world's ‘lifestyle superpower'.


by Chris Marshall on Jan 25, 2012 at 11:58

Since the mid 1980s ‘Europeans have been working fewer hours per week, fewer weeks per year, and fewer years over their lifetimes’. And they’re encouraged to do so because pensions come easy – too easy – and European spending on social security vastly outweighs that provided anywhere else in the world; in fact Europe already spends twice as much on social security as Japan and the United States.

That’s one of the conclusions from an ambitious report into the future of the troubled continent from the World Bank. ‘Europe’s governments will have to become more efficient, or become smaller’, said the institution, which was created from the ashes of the Second World War, and fosters free-market policies and small government – not always beneficially.

Europeans live in the ‘lifestyle superpower’, a status it maintains by spending more on social protection than the rest of the world combined, according to the report.

Governments in Europe are big: the world resized by government spending (in dollars, 2009)

Europe’s states are not big spenders on either health or education, the report says, rather they splash out on pensions and social assistance:

‘This is not because Europe has the oldest population (Japan’s is much older) nor because of higher pension benefits (annual subsidies per pensioner are about the same in Greece as in Japan). It spends more because of easier and earlier eligibility for pensions.’

We all know European governments need to cut back, but the gives this extra imperative. ‘Without comprehensive reforms to pensions and long-term health care these costs could add more than 3% to GDP to the governments’ fiscal imbalance during the next two decades,’ the report says.

European societies will also have to modernise social welfare systems so that the disincentives to work are minimised, the World Bank recommends. And Europeans will have to put more hours in – and more years.

29 comments so far. Why not have your say?

paris watcher

Jan 25, 2012 at 12:44

Sorry, complete balderdash!

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James Bailey

Jan 25, 2012 at 12:51

Completely agree with this report. A lot of Europeans have had it far too easy with extremely generous benefits and pension packages encouraging it.

If people want to retire early they should be more innovative or work harder in the early years rather than always relying on the state to bale them out.

Case in hand, Greece.

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Jan 25, 2012 at 12:54

Sorry but having seen the retirement ages around europe before the sh** hit the fan I tend to agree!

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Jan 25, 2012 at 13:03

Well, I am only surprised that the top policy makers have thought about this only now! The problems have been brewing for decades in my opinion.The wealth has to be created, not printed in the bank. Everyone had it too easy too long, easy benefit system set up by the politicians mostly to win votes, easy mortgage, easy borrowing, easy spending, easy life, which are all unsustainable if you do not have means of income, whether it is personal or government level. It is not a rocket science. Super nanny state system will fail because it gets rid of human instinct to survive. That was why the communist system has collapsed. When will the politicians ever learn??

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Jan 25, 2012 at 13:07

This has been blindingly obvious for a very long time, But governments have been afraid to tackle it because voters are greedy and look only at the short term .Now they are paying the price for wanting and expecting a cushy life. And some will further damage their cause by rioting and striking.

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Richard S

Jan 25, 2012 at 13:10

"When will the politicians ever learn??"

Two answers - (a) never, it is not in their interests to learn and (b) they already have but daren't say so and are cynical enough to hope it can carry on for the duration of their careers and then become someone else's problem

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rashmi vyas

Jan 25, 2012 at 13:32

The weak political system has allowed the problem of welfare to get out of hand. We need political willingness to tackle this problems and that is difficult due to weak leadership

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James Bailey

Jan 25, 2012 at 13:42

I think it is easy to blame politicians, and they have not admittedly helped matters. Ultimately however, it is an individuals choice to not work, to claim benefits and draw as much as they can from the state.

People need to change their mentality more towards one in which they work to provide for themselves and families.

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Linda Rushmore

Jan 25, 2012 at 14:38

This is merely a statement of the 'bleedin-obvious".

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Jan 25, 2012 at 16:06

I'm surprised that no-one has mentioned the European Working Time Directive, which has had a devastating effect on the NHS. Much of the extra money allocated to the NHS has been wasted on financing shift systems to accommodate the totally unprofessional working practices dictated by the EWTD.

Of course our European "partners" say that in a trading cartel all members must make similar provision for their workers to level the playing field, but the EWTD is surely several steps too far, and constitutes a legal impediment to those hitherto commendable attributes of hard work and dedication to duty.

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Jan 25, 2012 at 18:01

Most Europeans don't want to work Chinese hours for Chinese wages, so forget about free markets and globalization and embrace protectionism at least until the competition has gotten wealthier and slowed down.

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Jan 25, 2012 at 18:49

I worked in the pension industy for 38 years and can remember reading in the pension technical press about twenty years ago that someone in Italy who worked in a public service scheme who had reached age 31 and had done eleven years service could retire on full pension and because of this people went on pension at age 31 and then applied for another job in the public service. I wonder how many people took advantage of this very generous pension. No wonder Italy has problems. I think that one of the main problems in Europe is the cost of overgenerous public service and state pensions.

About fifteen years ago the final salary scheme I belonged to was closed to new entrants so the actuaries at the time must have realised that final salary schemes could no longer be provided due to cost. I can't understand why it has taken so long for final salary schemes to be closed down to new entrants to non public service schemes.

I don't think that public service scheme members realise how much it costs to provide the pension they receive. If you look at the annuity rates in the weekend papers you will see that for a man aged 60 with a wife aged 60 a cash sum of £100,000 would only purchase a joint pension indexed linked guaranteed five years of about £2,500.

I don't think Europe will be able to cure its problems until something is done about overgenerous state and public service schemes.

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Jan 25, 2012 at 18:51

James Bailey, it is not the politicians so much as them pandering to the innate greed of the people to get something for nothing, mainly those who chose either not to work or provide for their twilight years. The ones who are made to carry the burden are those that discharge their obligation to the State and work and save and provide for their old age.

The State needs to discharge its obligation to those that follow the rules and MAKE those who will not do more towards their support, now and later. If the shiftless do not, they should not later complain that they are hard up, they brought it onto themselves. There will always be some who did 'do their duty' and by circumstance find themselves hard up or 'unfortunate' (health etc), and for those we need some sort of exception, but strictly limited. Problematical.

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Richard Howe

Jan 25, 2012 at 19:01

An interesting piece, but until the socialist parties in europe realise that social progression, cannot be achived by loaning money, and spending money just to get votes, things will not change. Hopefuly this will know change in the furture due to the state credit crunch...

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paris watcher

Jan 25, 2012 at 19:15

I started off these comments having no idea that there would be comments like the above.

It's sad to think that people in Europe have fought to work less and now we have come to this! The reason people fought to work less is that it is known that too many years hard work leads (in most cases) to an earlier death. Statistics prove it. Working people in Glasgow still today die ten years earlier than a person from the posher Kensington & Chelsea.

So this move is a step back. Another way must be found. I feel it may be the top 1% who should give a bit.

(I am a sociologist.)

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rashmi vyas

Jan 25, 2012 at 20:10

I agree that the top 1% should be taxed more. But the ordinary person is competing with workers abroad and that requires them to be more productive.If we do not embrace this voluntarily then it will be enforced on us eventually.

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J Jones

Jan 25, 2012 at 22:48

Too much socialism & government spending in Europe.

Didn't work in Russia, doesn't work in the PIIGS or the UK.

Some people strangely think they are entitled to a good living standard without ever having to work.

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Kev Stewart

Jan 26, 2012 at 07:48

Reading these replies it is clear that Europhobia is alive and well in Britain. We are part of Europe after. In fact Europe is an extremely diverse continent. Obviously Greece is not Germany, Holland or Sweden for instance where the same regulations seem not to impede high productivity. Britain has been known as a low wage economy for quite a while now and just look at the mess we're in with the second highest borrowing requirements, next to Japan, in the developed world. We need to take a deeper look at how we work and not just indulge ourselves in Euro bashing.

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Jan 26, 2012 at 09:34

paris watcher and his ilk are the core of the problem. Take Take Take and let some other poor bugger pick up the bill. I have been watching the train wreck in Europe with amusement . There is only one end. It is not Euro bashing but reality. I am an economist.

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Kev Stewart

Jan 26, 2012 at 10:53

More like an ego onomist fatcat

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Jan 26, 2012 at 12:04

better that than being full of wind looking at your post. waffle waffle waffle!

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Stewie via mobile

Jan 28, 2012 at 09:23

It's a train wreck alright. Roll on the day governments can't afford the monthly public sector pension bill. I'd cut them all to a maximum of £400/month tomorrow. That'll sort out the deficit. And welfare, same limit. That's what people elsewhere in the world feel lucky to have.

The more companies and individuals withhold tax meantime the better.

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paris watcher

Jan 28, 2012 at 10:16

@ Stewie via mobile. Flowing with the milk of human kindness today, aren't you?! Let's hope you don't fall on hard times yourself, and have to try and manage on the £400pm you suggest. Your mobile would be out of the window for a start :o) !

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Mr Grumpy

Jan 28, 2012 at 10:33

Paris Watcher - a sociologist - surprise, surprise!

But you sell yourself short by not admitting to your other talent - that of a totally naive prick.

Give everyone a break and go demonstrate against something in your tent.

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derek farman

Jan 28, 2012 at 11:52

There is nothing wrong with people wanting to lead a less frenetic work life. However these days people expect so much and seem not to realise that everything has to be paid for.

When my wife and I were youngsters we had very little .

Modest house

No central heating

Modest car

No fitted carpets

Few labour saving devices

No luxury kitchen and bathroom

Modest holidays

Our only loan was the mortgage , and we lived happily within our means.

Now all that has long since been pushed aside by current generations who want all these things immediately.

I would be all for a more relaxed lifestyle for todays wage earners. But they must also scale back their impatient needs .

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Jan 28, 2012 at 12:08

From our Sicily Correspondent it appears that all is not well. Movimento dei Forconi (Pitchfork Movement!) are after the roots of the problem and are proposing the following:

These are some of their demands:

■The arrest of all corrupt politicians.

■To reduce the number of parliamentarians

■To remove the provincial bureaucracy, as most of these politicians have been there for over forty years.

■To drastically cut the salaries and privileges of parliamentarians and senators

■To restrict politicians two only two terms in office

These ideas need to be encouraged, however, the tyranny of the so-called democratic state will ensure they are snuffed out by more repression of freedom under terrorist legislation, and financial repression as the various government force feed us with more of their rapidly depreciating fiat currency.

More here:

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Alex Duncan

Jan 29, 2012 at 13:17

So the Greeks and Italians have decided that they should not pay all their debts. I understand that paying tax is voluntary in these countries and you only have to declare a small percentage of what you earn to the tax authorities. You are able to retire on almost the same weekly pension as what you were earning. Although we are not in the Euro Germany and France can not understand our reluctance to bail them out. What we can do is increase our contributions to the European Bank and let them bail bail out Greece and Italy.

Because we are not making the payments direct then that is alright then isnt it?

My state pension calculations show that my weekly pension is reduced by £103 ( Contracted Out Deduction it is called) because I was a member of my employers pension fund.. People who have never worked get the full pension plus pension credit et al. I understand that our government propose to increase the state pension to £150 a week for new pensioners in a year or twos time but not for existing pensioners who are nowhere near that level.

Please tell me that my althimers is not getting worse. I dont want to have to go into the home just yet.

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Jan 29, 2012 at 14:00

I understand that Germany, France and others still expect us to join in.

IF Greece is funded by the IMF (which includes us) then strict conditions will be imposed on Greece prior to the IMF disbursements.

IF Greece is funded by the ECB will the same kind of conditions be imposed?

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Jan 29, 2012 at 14:37

The Greeks are not going to accept oversight. This is good as they will now have no other way than to default and trigger the credit default swaps. Stand by for a massive bailout of European banks.

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