The tax burden on labor should be lifted

Set against the background of the deepening economic crisis within the member states of the EU, the European Commission is analyzing the development of poverty, unemployment and exclusion analyzed. Here the EU has shown a clear dichotomy: The highest values in terms of poverty and unemployment risk in the southern and eastern states, set against the relatively successful crisis management in the north, in particular in Germany, France and Poland.

In spite of the differences, the recommendations for overcoming the crisis, as proposed in the annual report on employment and the social situation in Europe released on 08.01.2013, are the same for all countries, namely employment reforms, stable social systems and lifting the tax burden on labor. László Andor, EU Commissioner for Employment, Social Affairs and Integration, explained: "Our analysis has shown that the member states, with the help of suitable employment market policy reforms and an improved structuring of the social welfare systems, can withstand economic upheaval more successfully and overcome the crisis more quickly.

However, Andor doubts that the socio-economic situation will see fundamental change in 2013, unless the Euro crisis can be convincingly negotiated. In addition, according to Andor, the financial economy must be restored to the service of the real economy.

Topics such as the long-term propagated cure-all of tax reduction to the stimulation of economic growth are no longer the subject of the report. Indeed, a strong mention is given to lifting the tax burden on labor as a factor of production, however, at the same time is is strongly recommended that this relief is compensated through the increased taxation of consumable resources and property.

According to the report, questions are to be asked regarding the single-state structure of the social system when it comes to the fight against poverty. Of course, reliable social systems do essentially have a stabilizing effect on the economy, however, comparable costs for social security benefits in the individual member states have produced very different results with regard to the reduction of poverty.

For all member states, the report portrays the increasing wage gap between low and high earners and the 16.4 percent salary differential between men and women, as was the EU average in 2010, as an unresolved problem. Meanwhile, one strategy in the employment market appears to have been empirically proven, namely that the employment quota for low-skilled workers in countries with a higher minimum wage tends to be higher.