What were some of the long-term social consequences of the European Expansion?
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What were some of the long-term social consequences of the European Expansion?
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The accession of 10 Eastern European states to the European Union from May 1 will intensify the social crisis in these countries as well as in the rest of the EU. The population in Eastern Europe has already suffered an enormous rise in poverty and unemployment, wage cuts and the devastation of social provisions in order to fulfil the criteria for EU membership.
The introduction of free market conditions, the privatisation of former state enterprises and radical austerity measures have led to devastating economic and social conditions.
Wages in the accession countries are presently five to eight times lower than in the EU. Average per capita GDP in the current EU states (24,250 euros) is substantially higher than in Hungary (€7,080), for example, or Latvia (€3,740).
Unemployment, the main cause of poverty, rapidly rose in the accession countries in the last 15 years. In the Czech Republic it climbed from 0.7 percent in 1990 to 6.5 percent in 1998 and is now almost 11 percent. On average, it is twice as high as in the EU.
These figures are not truly representative, as there are strong regional differences. In Bratislava, the capital of Slovakia, just 60 kilometres from Vienna, unemployment is approximately 4 percent. It rises to 60 percent in rural areas 200 kilometres further east. The national average in Slovakia is 16.6 percent. A similar range can be seen in Hungary. While unemployment is minimal in the capital Budapest, in other regions it rises to 40-50 percent. Unemployment among those aged under 25 is constantly increasing. In some regions some 45 to 50 percent of this age group are affected.
An unparalleled decline can be witnessed in all areas of society. In Poland and Hungary, the child mortality rate has risen by over 5 percent since the end of the 1980s. It is estimated that 50 percent of the Hungarian population are currently worse off than 10 years ago.
At the same time, Eastern Europe is considered a paradise for Western European enterprises. In order to attract foreign capital, business taxes have been drastically reduced. In the Czech Republic, it has been decided to lower the business tax rate by 7 percent to 24 percent. Like Poland before, Slovakia this year introduced a uniform tax rate of 19 percent, which applies equally to the ordinary worker, the multimillionaire and big corporations. Last year, those with high private incomes were still being taxed up to 38 percent. In Hungary the tax rate is also below 20 percent and the country is seeking to lure enterprise with tax exemption schemes lasting many years.
The Baltic states have established even better conditions for those willing to invest. In Latvia, the poorest accession country, several special economic zones have been established in which corporations enjoy tax exemptions of over 80 percent. Estonia has completely exempted business profits from taxes.
These lower taxes and the enormous wage differentials mean corporations are increasingly shifting their production to Eastern Europe. It is forecast that in a few years Slovakia will be the world leader in car production when measured per head of the population. Service and IT jobs are also being shifted eastwards. The logistics enterprise DHL, for example, plans a project in the Czech Republic worth €500 million. As a result, production in Britain will be reduced. The number of call centres will rise in the Czech Republic by around 70 percent over the next years.