Britain now most unequal EU country, says official report

18 May 2015, by Paul Sellers in Labour market

The UK is now the most unequal country in Europe, in terms of wages and income distribution, according to a new report by the Dublin Foundation for the Improvement of Living and Working Conditions, which is the EU’s official think tank on life at work. Not only that, but the rise in inequality is so big that it is partly driving the general rise in inequality in Europe. This is what the report says (with my emphasis):

“…the level of wage inequality in the EU as a whole is below that of the US. However, wage inequality in the UK, the EU’s most unequal country, is now above that of the US average. The UK, Latvia and Portugal are the three most unequal countries in Europe“ “The Great Recession changed the trend of overall EU wage inequality. Between 2004 and 2008, EU wage inequality decreased; after 2008, it increased. The decrease before the crisis was entirely due to a significant reduction in between-country wage differentials (in other words, a process of convergence in pay levels), which came to a halt in 2008 and even started to reverse at the end of the period of this analysis (2011). The main driver behind the increase in wage inequality after 2008, nevertheless, was within-country inequality, which until that point had remained more or less stable. But such increase was to a large extent driven by developments in the UK, without which the overall EU within-country component of inequality remained more or less stable as a result of rather diverse developments at the country level.”

The UK now also has the worst Gini coefficient of any EU country. Gini is the generally accepted measure of statistical dispersion that represents the income distribution of a nation’s residents. It is the most commonly used measure of inequality.

It is an absolute scandal that the UK has got into this situation. Despite its wide ranging problems, this is still a relatively rich country that can afford to treat all its citizens fairly.

The new government needs to address the challenge of putting this right. Their agenda must include raising the minimum wage and promoting the living wage, putting an end to the unfair public sector pay squeeze, creating more good jobs, leading industry towards higher productivity and curbing the excesses of top pay, with workers on remuneration committees.

Furthermore, rather than attacking unions, the government should recognise and welcome their power to deliver greater equality.

The UK is shamed today and our international reputation for “fair play” is seriously damaged. We must demand fair wages and incomes and accept nothing less.