Inequality in Europe is on the rise. The scientific findings of wealth research and the political implications were hotly debated.

On Tuesday, the Austrian Chamber of Labour (AK), the Austrian Trade Union Federation (ÖGB) and the Austrian National Bank (ÖNB) invited two high calibre panels to discuss distribution inequality within the European States. The participants of the first panel presented findings of wealth research and talked about the available data. Aurel Schubert, Director General, Statistics Department, European Central Bank (ECB) spoke about the motivation, which made the ECB deal with wealth research: both wealth distribution and composition have important implications for monetary policy and financial stability in the Eurozone.

Miriam Rehm, Expert for macroeconomics and wealth distribution, Vienna Chamber of Labour, talked about gender specific differences in wealth distribution. In the same way as differences exist regarding the income of men and women - keyword: Gender Wage Gap - there are also differences concerning their wealth; however, here there are even more drastic. Men have up to 50% more wealth, even if one takes factors such as age, education, work experience or the number of children into account. Martin Schürz, Head of the Monetary Analysis Unit, ÖNB, said that current data would still underestimate the concentration of wealth. The richest of the rich are usually not included in household surveys. The perception of the population too would not reflect reality. Due to the fact that “everybody” regards him or herself as middle class means that the population lacks awareness regarding the high concentration of wealth at the top.

The second panel discussed the political implications of the rising inequality in Europe. Erich Foglar, President of the Austrian Trade Union Federation ÖGB and Reiner Hoffmann, President of the German Trade Union Confederation DGB, discussed, together with the Director of Economics of BusinessEurope, James Watson, possible deriving actions against increasing inequality and what this concretely means for the social partners at national and European level.

Reiner Hoffmann emphasised that increasing inequality, both in respect of wealth and income would pose a threat to social peace and democracy. Collective bargaining policy, but also a fair minimum wage represent important action approaches for trade unions. In particular Germany would need an increased commitment regarding collective bargaining coverage to ensure a fair distribution; in the opinion of the Trade Union President, employers are here clearly under obligation.

Erich Foglar too argued that wage policy is the essential political instrument for trade unions to support social justice. In the medium term, everyone, who is working full time in Austria, has to earn a gross salary of EUR 1,700. In addition, the burdens of people on lower incomes have to be reduced. He sharply criticised the imbalance concerning the taxation between property or investment income and earned income. James Watson was certain that Europe would only be able to come out of the current situation if free trade would ensure necessary economic growth.

Over the coming years, inequality with regard to wealth and income will only be exacerbated through the effects of digitalisation, if politics fail to find a fair solution. There is a large potential of productivity growth. However, both Trade Union Presidents agreed that this has to be fairly distributed throughout the population.

Further Information:

 

Presentation Miriam Rehm - Gender Wealth Gap

Presentation Aurel Schubert - The distribution of wealth and why we care

Presentation Martin Schürz - Wealth in the Euro Area

Pictures of the Event