THE STATE OF THE EUROPEAN UNION

THE STATE OF THE EUROPEAN UNION

income in the richest decile rose by well above

average but the increase in the poorest decile

was faster than the upper middle classes (sixth

to eighth deciles). In Italy and Greece the lower

deciles even saw the largest growth in income,

which marked a complete reversal for Italy in

the trends seen during the previous ten years

(1985-95). Trends in the direction of greater

equality were seen in the Eastern countries of

Central Europe, but not in the Baltic countries,

Bulgaria or Romania.

For the post-2008 period we only have data

on income distribution per quintile. They show a

worsening for the majority of richer EU countries

and a slight improvement for the poorer Eastern

European Member States. The most noticeable

backsliding, however, was seen in Spain, which

topped the poll as the country with the most

unequal levels of distribution. Germany, where

income distribution had dramatically worsened

during the two decades leading up to 2008,

showed an improvement

Notwithstanding vari-

ous changes, the relatively egalitarian pattern

remained in place in the Scandinavian and the

Central European former communist countries,

as well as Austria and Belgium, but with one ex-

ception: Denmark seemed to have taken a dif-

ferent course to that of the rest of the group of

egalitarian EU countries. The poorest quintile

had become poorer and the richer half of the

population had grown richer.

For a society intent on allowing all of its

members to enjoy their fair share of the pros-

perity generated by the economy, it is crucial for

the lower income groups to keep pace, regard-

less of how rich the richest become. If we take

the average income measured in terms of pur-

chasing power for the lower fifth as a provision-

al indication (and nothing more!) of how fair

their share is, and look at how it relates to their

fair share, we see that in nine EU Member States

(not counting the special case of Luxembourg),

the figure is above 9000 euros with the highest

value (Netherlands) being just 15% above the

lowest one (Belgium). The values for the top

quintile (Q5), on the other hand, differ by 44%.

Naturally the 9000 euros of the lowest quintile

(Q1) could be concealing very different poverty

rates. But without any additional information to

hand we would attest that all nine countries

had “fair shares”, regardless of the values for

the upper quintile. The 9000-10,000 euros that

we find as the standard income of the lower

social classes in richer EU countries made up ap-

proximately half of the average income of the

middle quintile (Q3) in 2012 (as was already the

case by 2008) almost everywhere –there was

only Finland where it was considerably higher.

Naturally the income of the lower social

classes is lower in the countries where gross do-

mestic product (GDP) is lower. If we first take a

look at the five relatively egalitarian Central Eu-

ropean countries where the Q1 value measured

according to purchasing power is between

4,000 euros (Hungary) and 7,400 euros (Slove-

nia), we find roughly the same ratio of Q1 to

Q3. The situation is completely different in Spain

and Greece where the income in Q3 is three

times the amount of Q1. The United Kingdom,

Denmark, Portugal and Italy are somewhere in

between. In the altogether still rather poor

South Eastern Europe and Baltic Member States,

the real income for Q1 is so low that the situa-

tion can only be described as poverty (with the

possible exception of Estonia). Moreover, in Bul-

garia, Romania and Latvia, poverty is embedded

within a highly polarised distribution structure.

Lithuania and Estonia are more comparable in

this respect to Italy, Portugal and the UK.