The European Foundation for the Improvement of Living and Working Conditions (Eurofound) has recently published a report on inequality in Europe. The paper titled “Recent Developments in the Distribution of Wages in Europe” analyzed wage data across the EU between 2004 and 2011 covering the period before the beginning of the financial crisis and after it.
The study found that the EU country with the highest inequality is the United Kingdom, with a Gini coefficient higher than that of the United States. The Gini coefficient measures the income distribution of a nation’s residents and as such is the most commonly used as a measure of inequality. A Gini coefficient of zero means perfect equality whereas a Gini coefficient of one (or 100%) expresses maximal inequality. After the UK has been found to be the least equal country in Europe, it has been instantly branded the “European capital of inequality”.
According to the study, the UK has a Gini coefficient of 0.404 while the U.S. has 0.4. The kingdom is followed by Portugal and Latvia, which have Gini coefficients of 0.358 and 0.357 respectively. Europe’s average is 0.346. The report further says that inequality levels in the EU seem to have been aggravated by the economic crisis. “Between 2004 and 2008, there was a clear reduction in EU wage inequality, reflected in a fall in the overall Gini index from 0.368 to 0.336 (a 10 percent decrease in four years). This fall came to a halt in 2008, and the trend started to slowly reverse, growing to 0.346,” the study explains and concludes that inequality is simply increasing on the old continent.
The EU’s rising inequality is in line with the global patterns. Inequality has been growing in developed countries since the 1970s. The trend began in Anglo-Saxon countries and continuously reached also “traditionally low inequality countries” such as Nordic countries in the 2000s. The report claims that the financial crisis made inequality rise rapidly in the UK, which had a negative impact on the overall developments in Europe. The EU inequality since 2008 was reportedly “to a large extent driven by developments in the UK”. The report adds that without the UK, “the overall EU within-country component of inequality remained more or less stable as a result of rather diverse developments at the country level.”