The inequality gap is widening across the globe – but Europe restricts the damage better than anywhere else
Since the 1970s, the minimum wage in France has risen four-fold. Photograph: Alamy Stock Photo
Inequality is on the rise across the world, but it’s not increasing everywhere at the same pace. In many ways Europe stands out as a positive exception. Despite all the criticism thrown at the EU, it is a global leader in preserving a degree of fairness in the social fabric. This may seem unlikely – Europe is hardly devoid of problems and tensions. Parts of the left depict it as a vehicle for neoliberal economic policies, and parts of the right deride it as an inefficient administrative monster. So how is Europe really doing?
It’s hard to exaggerate the difference between western Europe and the USA when it comes to inequality. In 1980, these blocs of similar population and average income were also similar in income inequality: the top 1% captured around 10% of national income, while the poorest 50% took around 20%.
Things have changed dramatically since then. Today, the top 1% in Europe take 12% of income (in the US, 20%) while the bottom 50% have 22% (in the US, 10%).
It’s often said that globalisation and digitalisation explain the surge in global inequality, but that’s not a very convincing narrative. Since the 1980s, Europe and the US have had similar exposure to global markets and new technologies. But they have differed in policies and institutional direction. To date, Europe has shown that it’s much better at keeping inequality in check.
Put bluntly, the EU has resisted the notion of turning its market economy into a market society. It has partly rejected the thinking of Ronald Reagan and Margaret Thatcher, in which market forces, in the absence of any regulation, provide the best of all worlds in areas such as education, health and wages. There are large differences within Europe, though: the UK and Ireland have followed the American path more closely than continental Europe has. Nor can it be said that recent policy changes all go in the right direction. France’s recent reforms are strikingly similar to Donald Trump’s in how they favour the rich.
That said, social healthcare systems in most European countries still guarantee universal protection for all – hardly the case in the US. Many of those countries offer free access to university. Indeed, when policymakers in Bavaria attempted to introduce university fees in 2007, a referendum later overturned the decision. A young European’s hopes of receiving higher education depend much less on his or her parents’ income than their American counterpart’s.
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