News
BackThis week, the European Parliament presented a study on the subject of “Wage Dispersion in the European Union”. Particular emphasis was hereby given to income inequality, which has significantly increased since the 1980ies. In doing so, the study confirms the often adopted conclusion that a high level of income inequality is in general the result of wasted human resources, i.e. a situation, in which a large of part of the population is unemployed or caught in low wage work or low-skilled jobs. And this is exactly the state of affairs, which currently dominates our situation in Europe.
The crisis lowers the real purchasing power of minimum wages
The study shows that in particular over the past years, the recession had an impact on minimum wages, which resulted in a lowering of real purchasing power. However, the low presence of trade unions and the fairly small number of number of workers who are covered by collective agreements have left their negative marks. In some countries, such as in Ireland or the Netherlands, recent reforms have even resulted in the fact that another decentralisation of the collective bargaining negotiations has taken place. But it is interesting too that apart from wages capital income is also responsible for the largest share in rising income inequality. However, the study has finally reached the conclusion that the contribution made by wage inequality to income inequality is less relevant now that it had been in earlier studies. This is due to the wage rate, which is on the decline in most EU countries, a factor, which also clearly reflects the fall in employment rates in the Member States. However, overall, the fact remains that increasing income inequality in the European Union should be regarded as a risk, thus making it necessary to take urgent measures to tackle this problem. After all, an extremely unequal distribution of income also has a negative impact on both economic growth and standard of living.
Further information:
Study on Wage Dispersion in the European Union
PP Presentation of the Study
The study shows that in particular over the past years, the recession had an impact on minimum wages, which resulted in a lowering of real purchasing power. However, the low presence of trade unions and the fairly small number of number of workers who are covered by collective agreements have left their negative marks. In some countries, such as in Ireland or the Netherlands, recent reforms have even resulted in the fact that another decentralisation of the collective bargaining negotiations has taken place. But it is interesting too that apart from wages capital income is also responsible for the largest share in rising income inequality. However, the study has finally reached the conclusion that the contribution made by wage inequality to income inequality is less relevant now that it had been in earlier studies. This is due to the wage rate, which is on the decline in most EU countries, a factor, which also clearly reflects the fall in employment rates in the Member States. However, overall, the fact remains that increasing income inequality in the European Union should be regarded as a risk, thus making it necessary to take urgent measures to tackle this problem. After all, an extremely unequal distribution of income also has a negative impact on both economic growth and standard of living.
Further information:
Study on Wage Dispersion in the European Union
PP Presentation of the Study