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Forty years ago, the majority of rich Europe-
an countries were satisfied with how material
living standards in their societies were distrib-
uted. Of course inequality still did exist and
many groups of the population did not yet en-
joy their fair share of the increasing national
prosperity but there was optimism that society
would get ever closer to “prosperity for all”.
The poorer countries on the southern fringes of
Europe, as well as Ireland, saw themselves on
the way towards emulating their richer neigh-
bours. The people in the eastern countries
dreamed of introducing western prosperity into
their egalitarian distribution structures.
Things turned out very differently. Several of
the richer societies (but not all) experienced dra-
matic increases in both inequality and poverty.
The poorer countries stayed the course regard-
ing per capita income but there was no signifi-
cant decrease in inequality and during the last
two decades some areas even saw dramatic in-
creases, along with rising poverty rates. In east-
ern parts of Central Europe, after the transition
of 1989/90, a definite trend towards social po-
larisation emerged, despite the fact that a num-
ber of these countries are still relatively egalitar-
ian today when compared to the rest of Europe.
Some key figures:
In the EU of fifteen, i.e. before the large
wave of eastern expansion, from the period
stretching between 1995 and the 2008 crisis,
seven out of the ten deciles of income distribu-
tion saw their average disposable income in-
crease by between 1.22% and 1.28% each
year. For the richest decile, however, it increased
by 2.26% each year and for the poorest by
1.06%. For the second richest this figure was
1.31%. Across a plethora of countries, the in-
crease in inequality occurred on a dramatic
scale. In Germany, the disposable income for
the top decile increased by 1.32% each year,
multiple times greater than the increase in all
other deciles. The poorest tenth registered an
annual decline in income of 0.14% over the 15-
year period, the second poorest by 0.2% and
the third poorest still by 0.03%. In the Nether-
lands these figures were -0.27% for the poorest
and +2.44% for the richest, whilst the lower
middle classes experienced a greater increase
than the upper middle classes. In the UK as well
as the more egalitarian Nordic countries the
poorest decile lagged significantly behind the
rest whilst the richest decile was well above av-
erage. Other patterns, however, emerged too.
In France, as in the majority of Member States,
Inequality in Europe in the
early 21st century
Alfred Pfaller