Worries in the face of reality

August 2011

The economic and currency crisis has left its mark in the minds of Europeans. Given the news of faltering national economies, a stream of bailout packages, and austerity measures, people are worried about the future. Especially the subject of unemployment and increasingly also inflation are giving Europeans food for thought. Germans are particularly critical, and despite a comparatively positive economic trend, they are looking anxiously at the unemployment statistics and the purchasing power trend.

In total 39% of Europeans view the situation on the labor market with unease. Although this issue is not quite as much at the forefront of people’s minds as last year (43%), it is still number one on the list of worries of Europeans. This is demonstrated by the results of the “Challenges of Europe” survey, for which more than 13,000 consumers from eleven countries were again interviewed in February 2011 about the most pressing issues on behalf of the GfK Association.    

Spain: fears about jobs

Unemployment figures are viewed with anxiety in Spain in particular. A good three quarters of citizens are demanding that the government concerns itself more with securing jobs. In France and Germany, more than half of the population is worrying about this issue, and in Italy it’s 50%. In Poland, 44% of citizens are hoping for an improvement in the job situation and in Sweden approximately a third. People in Austria, the UK and Russia think this is a lot less important, with the figures in this case around the 20% mark. Only Belgians and the Dutch are less worried about the job market, at 12% and 6% respectively.

Russia: worries about inflation rates

Having to shell out more and more money for less and less goods is a fear that is increasingly preoccupying Europeans this year. The subjects of price and purchasing power trends have gained significantly in prominence. While in 2010 not even 20% of those interviewed were worried about rising inflation, the figure had climbed to 26% in 2011. Russians are most anxious about inflation, with fears on this subject ranking in first place at 42%. In Germany and Poland, roughly one in three respondents are worried about price trends, and in France the figure is one in four. At around 15% each, Italians, Belgians, Austrians and Brits ascribe somewhat less importance to this issue. In Spain and in the Netherlands, the focus appears to be on other challenges, with only 5% of people seeing inflation as a worry. The figure is even lower in Sweden, where only 1% of citizens are apprehensive of risks from rising inflation rates.

Germany: number one worrier

How realistic are Europeans’ assessment of the risks for the job market or purchasing power really? Are their worries reasonable and does how they feel correspond to the reality in the respective country? If we take a look at the figures for the job market and inflation rates, it becomes apparent that many nations think the situation is worse than it actually is. The Germans are particularly sensitive. Although Germany is regarded as the “economic engine” of Europe and can be pleased about having a stable economy and falling unemployment figures, more than half of Germans still regard the subject of unemployment as a particularly urgent matter. However, in comparison to last year, the unemployment figure has dropped by 11 percentage points, so a little bit of relief can also be sensed amongst Germany’s otherwise so critical citizens.

Most of all, the Spanish have reason to worry. With an unemployment rate of more than 20% in February, Spain is one of the prime causes for concern in Europe, so it is no wonder that more than three quarters of people see jobs as the government’s most important task. This fear recently manifested itself on the streets of Madrid, where thousands of young people protested against social, political and economic grievances in April.

France and Poland are suitably (extremely) concerned about the job situation (in both countries more than 9% were without a job at the last count), and so this issue ranked number one in both nations. However, the Poles, at 44%, are somewhat more relaxed than the French, where almost 60% are worried about the job market.

Italy is also visibly concerned about the subject of the job market. Although the jobless rate is below the total European average of 9%, half of people see an urgent need for action. The aftermath of the economic crisis was apparently still being felt at the time of the survey, in that the situation on the job market had not eased yet and was likely to intensify further due to the current debt crisis.

Austria, Sweden, Belgium and Russia were recently able to celebrate a fall in the jobless total, and so job fears subsided accordingly. Only in the UK are more people worrying about this issue than last year, although at 21% the numbers are still at a reasonable level. The Dutch are most relaxed about the subject of the labor market, which is hardly surprising; after all, the trend in their country has been comparatively positive.

Price fears: Germans are worried

On the subject of inflation too, it is clear that Germans are particularly sensitive. One in three fear rising prices, with only Russians, at 42%, viewing this as a more pressing problem, although they are likely to have to contend with an inflation rate of more than 10% this year. People are having to dig much deeper in their pockets for basic food items, in particular, than just a few years ago, although Germany does not have these problems. The inflation rate of a good 2% was well below the total European average. France and Poland are also excessively anxious when it comes to price increases. While worries about purchasing power is traditionally a big concern for the French, the Poles suffered actual prices increases for energy and food at the beginning of the year.

The UK, Belgium, Austria and Italy are in the middle range, at around 15%, when it comes to worries about the inflation rate, although the trend is on the up. People in these countries are increasingly concerned about developments with regards to energy prices. In Spain less than 10% of those surveyed are currently worried about spending power, although the figure is higher than in the previous year. This is hardly surprising, given that prices are increasing and incomes are staying the same or falling. Swedes are least concerned about the price and purchasing power trend, as here only 1% think the government needs to take action. On the other hand, in the Netherlands, where the inflation rate is even lower than in Sweden, 5% of people are concerned about this issue nonetheless.

Overall, consumers in Europe are therefore assessing the current situation very realistically. In many countries people surveyed are aware that, at present, they are doing comparatively well when it comes to inflation and unemployment figures. Germany is one of the exceptions, as here there is a particular sensitivity about spending power and jobs, which can certainly be partly explained by the historically-shaped mentality.

Data source: GfK Verein (Challenges of Europe 2011, Februar 2011, Challenges of Europe 2010).

If you have any queries concerning this article or Compact, please contact Claudia Gaspar,  e-mail: hello@nim.org.

Click here to access the Press Release Challenges of Europe 2011 [Link]