Economic and social imbalances within the EU

Bar chart showing the per capita income of the EU-13 adjusted for purchasing power
Development of the per capita income of the EU-13 adjusted for purchasing power compared with that of the EU-28. © SECO

Although the new EU member states are catching up, significant economic and social disparities remain within the EU. The purchasing power of the states that have joined the EU since 2004 (EU-13) is still on average significantly lower than in the other member states. While their basic needs are covered, in terms of wellbeing, and especially opportunities, there are still major differences.

In the first year of the enlargement in Eastern Europe, the purchasing-power adjusted per capita gross domestic product in the new members states was half that of the older EU states. Since then, almost all the new EU member states have been catching up strongly. However, their purchasing power is still significantly lower than the EU average. The remaining economic and social disparities are even bigger if not only the imbalances between the member states are taken into account but also imbalances within these countries.

Back on a growth path following the financial crisis

The 13 new EU member states experienced a strong economic upswing between 2001 and 2007. Increasing integration in the global economy, however, also increased these countries’ exposure to external shocks. The economic and financial crisis initially hit the new EU member states very hard. The 6.7% average economic growth rate of the EU-13 in 2007 fell to minus 6.8% in 2009. The situation has stabilised in the meantime. The economies of the EU-13 are growing again and almost all these countries have reduced their unemployment rates. Unemployment among young people is on a downward trend but remains at a worryingly high level.

Fewer opportunities

In 2016 the EU published its first regional index on social progress. It covered the following three comprehensive dimensions of social progress: basic human needs, foundations of wellbeing, and opportunity. Each dimension is made up of four thematic areas, covering themes such as medical care, quality and affordability of housing, personal safety, access to advanced education, and pollution. The index is based exclusively on social and environmental indicators. The results show that social progress in Europe is highest in northern Europe and the Netherlands and at its lowest in Romania and Bulgaria. While basic human needs remain inadequate in only very few regions (all in the EU-13), in terms of wellbeing and especially opportunity major differences are evident.