The European Commission published a report that highlights that unemployment is hitting new peaks not seen for almost twenty years, household incomes have declined and the risk of poverty or exclusion is on the rise, especially in Member States in Southern and Eastern Europe, after five years of economic crisis and the return of a recession in 2012.

The 2012 edition of the Employment and Social Developments in Europe Review published by the European Commission shows that the impact of the crisis on the social situation has now become more acute as the initial protective effects of lower tax receipts and higher levels of spending on social benefits (so-called "automatic stabilisers") have weakened. Also, the report shows that a new divide is emerging between countries that seem trapped in a downward spiral of falling output (mostly placed in Southern and Eastern Europe), fast rising unemployment and eroding disposable incomes and those that have so far shown good or at least some resilience. The unemployment rate in the euro area and in the EU increased in October 2012 in comparison with September.

The report confirms a new pattern of divergence, which is most striking between the North and the South of the eurozone. The unemployment rate gap between these two areas was 3.5 points in 2000, fell to zero in 2007 but then has widened fast to 7.5 points in 2011. The absence of tangible recovery has put under pressure household incomes in the majority of Member States and increased the risks of long-term exclusion. The report recommends to undertake policies to specific country situations and population groups most at risk in order to prevent rising poverty and long-term exclusion from becoming entrenched.

The report's analysis of minimum wages shows that countries with higher minimum wages have not priced the low skilled out of a job and on the contrary tend to have higher employment rates for them. Minimum wages also have the potential to narrow the gender pay gap. Moreover, the report shows that in some countries, especially in the Southern part of EU, the match between skills and jobs is bad and/or has worsened. The Commission stressed that to reduce the skills mismatch, countries need to invest more efficiently in education and training, spend better on active labour market policies and support the creation of high skilled jobs in growth sectors such as the green economy and technology, information and communications technologies and healthcare.