Brussels, 29/02/2016 (Agence Europe) - Almost all of the European Union's member states are experiencing the same trend: the loss of their middle-income earners who are less and less able to contribute to economic growth. Increasing inequality is the main reason behind the phenomenon, according to a new report from the International Labour Organisation (ILO) prepared in collaboration with the European Commission and presented in Brussels on Monday 29 February.
Very few have been able to resist the recent trend of rising economic inequality, which French economist Thomas Piketty brought into the public debate through his book “Capital in the 21st Century”, which was published in 2013.. The ILO report, “Long-term trends in the world of work: What effects on inequalities and middle-income categories?”, seeks to demonstrate the impact of the economic and financial crisis on middle-income earners in Europe and to show that a correlation exists between the rise in inequality and the erosion of this category. Thus, the countries where inequality is highest (the Baltic States, Spain and Romania) are also the countries with the smallest middle-income earner category. Conversely, Sweden and the Czech Republic best exemplify that lower inequality encourages the growth of middle-income earners.
Trends over the last ten years are, however, virtually identical across all EU member states. The 2008 crisis seriously impacted on middle income categories. The middle classes are diminishing after growing rapidly in the 1980s and 90s, decades which saw a rise in employment of women. This reversal has a number of causes but the report highlights in particular long-term trends, such as the rise in atypical forms of employment and the weakening of job security in the public sector. These trends were amplified by the crisis, creating a vicious circle where the erosion of the middle income category leads to economic slow-down.
Only a few countries - Belgium, France, the Netherlands and Sweden - are bucking the trend. In these countries, there has been little change in the middle class, something the report says is the result of stable industrial relations systems. While, at first sight, this chimes with the oft-repeated Commission message of the importance of social dialogue, the report goes completely against one of the EU's key arguments for years - that perfect correlation is required between wage levels and productivity. Indeed, the report praises the Belgian system of automatic wage indexation which has helped stave off inequality. (Original version in French by Jan Kordys)