Where is Inequality Headed?

The European Union (EU) was created from a desire for peace and prosperity after the carnage of World War II. It all began with the formation of the European Coal and Steel Community in 1951 which aimed to unify and expand state economies, raise living standards, and reduce unemployment. The purpose was to create the basis for a region of economic and social equality, in turn leading to harmonious integration and unity in a European Community.

Tony Atkinson. Image: European Trade Union Institute

Tony Atkinson. Image: European Trade Union Institute

However, peace in the EU is threatened by rising economic inequality. On Friday 25th January, I attended a lecture entitled ‘Where is inequality headed?’ organised by the European Trade Union Institute, and delivered by Tony Atkinson, Deputy Director of Economic Modelling at the Institute for New Economic Thinking at the Oxford Martin School, University of Oxford. During his lecture, Tony Atkinson tackled some thought-provoking points concerning the current growth of inequality in Europe. He identified the need to delve deeper into national issues concerning inequality. A ‘static poor’ and ‘rising rich’ are leading to greater disparity in income, with a small percentage of the population amassing a large proportion of national wealth, while those at the bottom end of the scale receive a static income. Tony Atkinson’s analysis of historical evidence of income disparity raises the question as to whether inequality will continue to grow or remain constant. The increase in inequality over the last 30 years has been due to the rapid growth of the top 1% of wage incomes, i.e. the ‘rising rich’.[1]

In his lecture, Atkinson highlighted that inequality had mainly decreased in the Nordic countries over the last twenty years, inequality hs been rising elsewhere, by 4%, for example, in Germany. An article entitled The Equality Trust Research Digest: Trends and Measures states that ‘in the 1960s Sweden and the UK had similar levels of income inequality. By 2005 the gap between the two had increased by 28%’.[2]  Quakers have spoken out against economic inequality in the UK, and the current UK economic and political ethos. According to Meeting for Sufferings by minute S/12/03/3, 31 March 2012, ‘Quakers in Britain deplore the increasing concentration of economic authority and the social stratification that transmits inequality across generations … [enabling] leaders of finance and industry to take salaries and bonuses that are many hundreds of times larger than those of their employees’.[3] The concern would be the same for every population, including every EU Member State. Unless we take action, growing income disparity will lead to an increase in relative poverty and insecurity for many, whilst a small percentage will continue receiving a disproportionate income.

Tony Atkinson also made reference to the Managing Director of the IMF, Christine Lagarde’s, recent speech, ‘A New Global Economy for a New Generation’. Lagarde stated that ‘excessive inequality is corrosive to growth, corrosive to society; [thus] more economic stability, more sustained economic growth [supports] healthier societies with stronger bonds of cohesion and trust’.[4] If the problems of inequality are not solved, at the local, regional and global level, this can only be disastrous, sustaining visible disparities of wealth and leading to further social inequality. There is a need to change the economic mindset; increasing inequality has the potential to weaken democracy and create a more unstable macro-economic climate. This has been seen in Greece over the past three years where demonstrations and general strikes have taken place in protest against the public spending cuts and taxes raised by the government to fulfil bailout funding. This social unrest is the result of dramatic economic inequality levels in Greece, visible also in Spain and Portugal. Even countries perceived as economically sound, may be time-bombs, slowly ticking away with rising inequality.

Atkinson made a fascinating point about rising inequality in Germany. The country has been portrayed throughout the financial crisis as one of the main game-players in the introduction of austerity measures in Europe over the last year, perceived as guiding the EU away from economic uncertainty. Nevertheless Germany’s inequality is rising. In 2008, the average income of the top 10% of the working-age population In Germany was 57,300 euro (70,000 US dollars), nearly eight times higher than that of the bottom 10%, who had an average income of 7,400 euro (9,100 US dollars).[5] One indication of inequality is the Gini coefficient. Gini ranges from where 0 is equal to perfect equality and 1 equal to perfect inequality. This ranking shows some interesting results: the Gini for the US is 0.42, for the UK 0.34, and for Germany 0.28.[6] The relative equality of Germany is now changing; inequality is rising and dissatisfaction towards government and EU policy is also rising, and not just only in Germany.

We need to give expression to our Quaker testimony to equality by showing respect towards everyone and cooperating on a basis of equality. We need to acknowledge that everyone has a part to play in working towards greater equality instead of working only for profit. Only then can true equality begin to become a reality.

 

 

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About Imogen Parker

Imogen is a Programme Assistant at the Quaker Council for European Affairs. She started work at QCEA in January 2013 after completing her Masters in International Relations at Leeds University, UK.
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