The social consequences as a result of EU expansion Essay Example for Free

The social consequences as a result of EU expansion Essay The accession of ten nations of Eastern Europe will increase the existing social crisis in these nations and also the entire EU. The Eastern Europe population has already suffered a lot as a result of increase in unemployment levels, poverty decreased wages, the destruction of various social provisions in the region in an attempt of fulfilling the membership requirements of EU. There has been introduction of conditions of a free market, the enterprises which were formerly being controlled by the governments have been privatized and also taking up measures which are quite radical by various states in order to join the EU has left the economies and social conditions of their countries very much devastated (MCCORMICK, 2007). The wage levels in the countries that are seeking to be admitted to the EU community are currently lower by 5 to 8 times as compared to the wage levels in the EU. The per capita average of the gross domestic product in EU countries is currently about twenty four thousand two hundred and fifty euros which is quite high when compared to that of states that are seeking to join the EU community such as Hungary and Latvia that only have a gross domestic product of seven thousand and eighty euros and three thousand seven hundred and forty respectively. The main cause of poverty in most states seeking admission into the EU community is unemployment; it has increased drastically in these countries over the last one and a half decades. A good example is that of the republic of Czech where it has increased from about zero point seven percent in 1990 to about six point five in the year 1998 and it is currently about eleven percent. On average, this percentage is twice as much in EU (Fischer, 2000). Although, the figures given above do not give a true reflection of the comparison, since there exists a lot of regional disparity. But the quest for countries to become members of the EU community and thus trying as much as they can to fulfill the conditions set is an obvious factor that has made these countries to experience some of these devastating problems like increased levels of unemployment and deterioration in the social amenities. In Bratislava which is the Slovakian capital, which is about sixty kilometers away from Vienna, the levels of unemployment are about four percent. This increases to approximately sixty percent in the rural regions which are about two hundred kilometers to the east. A comparable range of unemployment can be observed in the state of Hungary. Although, the unemployment levels are very minimal in the Budapest City, in the rural areas it increases to more than forty percent (MCCORMICK, 2007). The enterprises of the Western Europe consider the regions in the east of Europe as a paradise for their investments. This has made the states in the Eastern Europe to reduce their taxes in an attempt to make of making these regions attractive to the Western Europe investors. Czech Republic has reduced the rate of business taxes by about seven to twenty four percent. Poland has followed the steps of Slovakia and has introduced a tax rate which is uniform of nineteen percent which is applied uniformly whether one is just as ordinary employee or is a millionaire (MCCORMICK, 2007). The tax incentives together with massive differentials in the average wages has made several corporations to rapidly shift their production plants to the Eastern Europe states. This will in future make the states in these regions such as Slovakia to become the major car producers in the world when computed per person of the Slovakian population. Information and Technology as well as service industries are also being moved to these regions this will in future mean the creation of massive jobs in these regions as well as development of infrastructure (Roney, Budd, 1998). However, despite the major benefits that is likely to arise as a result of the tax incentives in these regions, the tax experts are warning the governments of these states that these measures are likely to be insufficient to enable these governments adequately cater for all their needs. They will also never be fully compensated for the shortfalls they will experience from the decreased revenues arising due to the reforms. These tax measures will leave several big holes in their budgets and as a result they will not be able to provide their citizens with all the necessary social amenities (MCCORMICK, 2007). In part, this state of affairs has been achieved already in the countries that wish to become members of the EU community. As far as the economists are concerned the foreign trade and budget deficits are the real potential crisis to the economies of these accession states. A good example is the one Estonia where the deficit in its budget rose to about fifteen percent in 2003. This is higher by about five times when compared to the deficit in the Argentinean budget in 2001 which was responsible of provoking a massive financial crisis. In 2004 Hungary, there was massive pressure on the forint as a result of the increasing deficit in the country’s budget. At that time the deficit in the foreign trade was about fifty eight percent while in Latvia it approximated sixty four percent of the total gross domestic products (Hofmann, Turk, 2006). Contrary, the accession countries will not improve the state of affairs even after they become members to the EU community. All the relevant economic indicators show that the disparity in wages between the west and the east will continue to persist for more than a decade after their accession. Again the reforms being undertaken by the states in the east of Europe will continue even after their accession. For example, the government of the Republic of Czech revealed that more reduction in pensions provision and health sector were necessary. Considering the prevailing welfare condition in the country, such a move can only be equated to privatization (MCCORMICK, 2007). Most likely, the Western Europe conditions will be modified with the conditions of states that are seeking accession. Even more attacks which are very comprehensive on the social standards and wages will be required to continue being competitive. According to an economic research study that was conducted by the University of Munich, indicated that the cut in wages that has been proposed in East Germany should be implemented. This is because after the accession of the Eastern Europe states, the regional financial support that was coming from the Brussels will decrease and this will lead to increased unemployment which will be a major threat to the economy of these countries (MCCORMICK, 2007).