The conclusion no one denies: Three decades of rising inequality

Since the 2008 crisis, the Organization for Economic Cooperation and Development (OECD),1 the European Commission,2 the National Institute of Statistics and Economic Studies,3 along with other statistics institutions within the European Trade Union Confederation,4 have all agreed on this fact5: In recent decades, social inequalities have increased significantly across Europe. And not only in Greece or Spain; the situation is the same in Sweden and Germany. In the past twenty-five years Swedish society has experienced a considerable growth in inequality6; according to the OECD, between 1985 and 2008 the country recorded the highest growth of income poverty among industrialized countries.7 In Germany one in six is ​​now at risk of poverty.8 NGO Caritas Europe denounces the increase in poverty and inequality across Europe, especially in the seven most affected countries—Greece, Spain, Portugal, Ireland, Italy, Cyprus, and Romania.9 In six years, from 2009 to 2014, 800,000 people have left Spain. Last year, there were still 125,000 set to leave. In Greece, one third of the people has no health insurance and no access to health care. In France, the central intelligence of the interior minister, that is, the police and gendarmerie, is now worried about the situation within hospitals and the tensions surrounding hospital emergencies.10 In their latest report, Benchmarking Working Europe 2014, the European Trade Union Confederation (ETUC) and its center of expertise, the European Trade Union Institute (ETUI), came out against the “increasing social inequality, the weakening of national solidarity mechanisms, and dismantling of national social models.”

In recent years, the OECD—the European economic institution most favorable to neoliberal policies—has also turned up the alarm on inequality. Michael Förster, social policy analyst for the institution and coordinator of the 2012 report on the evolution of income inequality in rich countries,11 has already noted the unambiguous progression in income inequality in the majority of wealthy countries since the mid-1980s. The theme of inequality emerged even in January 2014 at the World Economic Forum held in Davos, an event bringing together political and business leaders. In May 2015, the secretary general of the OECD, Angel Gurría, expressed alarm over the unprecedented increase in inequality in the preamble to the latest report:

We have reached a critical point. Inequality in the OECD countries has never been higher than we now measure it. Figures show that growing inequalities impede growth. The topic for political action is as much social as it is economic. By not addressing the problem of inequality, governments destroy their social model and affect long-term growth.12

This is a radical change in doctrine within the OECD, which has long argued that the increased inequality was the ransom for greater efficiency of the economy under a supposed “trickle-down theory” claiming that the wealth of some—even a very small number—would eventually trickle down to all. The report states, “Income inequalities have reached record levels in most OECD countries and remain at higher levels even in many emerging economies. Today in the OECD area, the top 10 percent of the population earning 9.6 times the income of the poorest 10 percent, compared to 7.1 percent in the 1980s and 9.1 percent in the 2000s.” This increase concerns countries known for their high level of inequality, such as the United Kingdom, but also the Scandinavian countries of Europe traditionally considered to be more egalitarian.13

When inequality rises there are losers, quite a lot of losers, but there are also winners. Specialized business publications like Forbes, Manager Magazine, and Challenges have made lists identifying billionaire upon billionaire, and the billionaires have never been so rich.14 For example, according to Challenges, in France the 500 largest fortunes have increased fivefold since 1996 and the top ten sevenfold.15 The study on large fortunes published in autumn 2014 by Credit Suisse16 confirms an earlier report released by NGO Oxfam17: the concentration of wealth has reached unprecedented levels since the 1920s. The richest 1 percent owns 48 percent of global wealth. In short, the social distance between the oligarchies and the rest of the population has not stopped growing.

Rising inequality is the result of neoliberal policies

The growing social inequality in Europe is the result of the implementation of a systematic policy of disruption of previous “compromise balances” developed in Western Europe and the United States in the aftermath of World War II. Before the turn to neoliberal policies in the late 1970s, as explained by Alain Bihr,18 the reproduction of class relations under late capitalism was characterized by the establishment and maintenance of a “compromise” between capital and labor. The famous Fordist compromise was based on a sharing of productivity gains between growth in real wages (direct and indirect) and a growth in profit made possible by the generalization of scientific management (or Taylorism) and the mechanization of the labor process. This compromise was supervised and guaranteed by the states.

What were the various institutions and procedures that contributed to it? The institutionalization and the animation of a permanent dialogue between the different social classes (more precisely between their representative organizations: professional organizations, trade unions, political parties, and so on) and the development of structures for the purpose of negotiation between the so-called social partners (the term refers to the pacification of class struggle in the Fordist compromise). The period between 1945–1970 was also marked by the establishment, or expansion, of a set of public utilities (electricity, water, postal system, health, schools) throughout national territories.

The neoliberal turn took place in the late 1970s and early 1980s in Europe. The regressive evolution was noticeable early on, along with measurable public statistics appearing as early as the 1990s.19 The first empirical studies that highlighted growing social inequalities were for a long time ignored by the mainstream media or outright denied. This is not the case anymore. Some—among supporters of the capitalist order—even fear now that the scale of inequalities feeds a movement that calls into question this order.

These same neoliberal policies have produced more contradictory effects in Southern Europe. The collapse of the command economies of the states of Central and Eastern Europe resulted in the forced adoption of the market economy—under the influence of shock therapy advocated by the infamous Chicago Boys. Even in these states there are economic and social inequalities, but also uneveness in terms of the development between integrated regions or countries in a subordinate position, the dynamics of capitalist sectors dominating the European Union, and those irreversibly marginalized. But with the fall of the command economies, the European continent was reunited under the law of a more liberalized capitalism.

The liberalization of the movement of capital and commodities has played an essential role in the development of inequality. First, the increased labor competition exerted a downward pressure on the share of wages in total wealth, a process exacerbated by relocations, deregulation of labor markets, the downward revision in the standards of social protection, and the gradual reduction in the scope of intervention by governments and public authorities. This took place against the backdrop of a strong and persistent structural unemployment, a growing precariousness of employment, and a weakening of the fighting capacity of salaried workers.20

The role of European institutions

This picture would be incomplete without a word concerning the policies pursued by the European Union (EU). In the article devoted to this question appearing in the Dictionary of Inequalities, Pierre Concialdi presents three principal means of action: the EU budget, the standards set by the EU, through directives or regulations, and finally, all recommendations or processes that fall under the so-called soft law, which are, in fact, not binding for member states of the EU.21

Regarding the European budget, we should first underline its weakness: in 2015 it amounted to just over €140 billion, forty-five times less than the member states’ overall national budgets.22 This budget represents less than 1 percent of the EU’s GDP. Consequently, the policies of the EU are much more limited in scope than those that can be taken at the state level. They mainly concern two areas: the so-called social cohesion policy designed to help the regions and the poorer countries to catch up and integrate into the single market, and the Common Agricultural Policy (CAP). Since 2004 the European Union has added thirteen new member states.23 The budget for these funds was reduced so that these incoming countries, which were among those whose economic backwardness was larger compared to other EU member countries,24 found that the share allocated to them was much smaller than received by other earlier “latecomer” countries such as Ireland, Greece, Spain, and Portugal. The impact of these funds on reducing regional inequalities will thus be considerably weaker. When we see the economic and social situation of these four countries, we can wonder what will be the long-term effects of the allocation of these funds.

Guidelines and regulations form the second-lever actions of European policies; these are laws that are binding on states. The legislative and regulatory activity of the EU operate in two areas of competence that have an impact on inequality: the free movement of workers, and equal pay for women and men. The main benefit of these measures is that they can combat certain forms of discrimination, and therefore certain situational inequalities, while seeking to make the labor market as competitive as possible. Their main limitation is that they do not directly reduce many forms of inequality (income, access to health care, and overall health, for example) that are not the product of discrimination.

The third lever is part of what is called the soft law; it is realized mainly through the open method of coordination, which applies to areas that remain essentially the responsibility of states. This is notably the case for social protection, which constitutes a major tool for the redistribution and reduction of inequality. Through this open method of coordination, states set nonbinding targets and provide tools to assess their achievement (good conduct guidelines, sharing of best practices, peer review, “benchmarking”). In social protection, it is significant to observe that “the reduction of inequalities is never mentioned as a possible purpose of a social protection system,” and barely “as one of its effects.”25

However, the EU is implementing many other policies that, in effect, have a countervailing impact on inequality. In this regard, we must mention the role of the Broad Economic Policy Guidelines, which have a very structuring character and limit the action of member states in the policies they can carry out at the state level to act on inequality—including social inequalities. These guidelines are the main instruments for coordinating economic policies. They also define strict deficit targets and in public indebtedness, according to first criteria set by the Maastricht Treaty (1992), specified by the Stability and Growth Pact (1997), and now confirmed and hardened by the Treaty on Stability, Coordination, and Governance, which came into force on January 1, 2013. Throughout this process, the pressure on member states to respect the deficit and debt criteria have become stronger and stronger.

To the extent that the European Commission usually considers higher tariffs, however desireable, to be a hindrance on the development of market mechanisms, the commission’s recommendations cover the reduction in public spending—most of which consists of social expenses. This can only weaken the impact of social policies designed for the redistribution of income and reduction of inequality. In general, the policies conducted and driven at the EU level are the central axis in the promotion of “free and undistorted competition” and give a key role to market mechanisms. In this trend there is a growing commodification and privatization of social protection, a development of the flexibility and precariousness of the labor market, and the privatization of public services—some of the many phenomena that are the sources of growing inequality.

Austerity in wages and deteriorating living standards

The essential result of the implementation of neoliberal policies has ultimately been wage austerity—stronger or weaker according to the regions or countries concerned, and depending on the effective implementation of policies and workers’ resistance. Thus, these policies have helped to reverse the dynamics that reduced social inequalities in these states since the mid-1970s; and what numerous statistical data and socioeconomic studies have confirmed since then26—even despite how the social sciences were relatively disinterested in the study of social inequality and its aggravation during the same period.27

The decline in the wage share in total wealth, observed since the early 1980s, was accompanied by an increase in the share of profits and a recovery in the rate of profit. The share of profits devoted to taxes has remained roughly constant, the one devoted to interests declined due to a global reduction in corporate debt. The investment rate remained almost stable. The most significant development was the increasing share of profits going to shareholders as dividends. This lead to an increase in social inequality, favored the production of luxury consumer goods, the swelling of the financial and real estate bubble, and ultimately caused the 2008 crisis.

Moreover, for wage earners, especially for the working class, working conditions have deteriorated in recent decades.28 According to the results of the fifth survey (conducted in 2010) by the European Foundation on Living and Working Conditions in Dublin, the proportion of workers exposed to physical and chemical hazards at work has increased since 1991. Similarly, repetitive labor under difficult pressure and deadlines is increasing. That also goes for psychological risks linked to pathogenic forms of workplace organization that can lead to suicide. Low-skilled employees in the service industry (call centers, supermarkets, and so on) are hardly spared, and broadly share in the overall global deterioration in working conditions, as do also larger sections of the civil service sector since the introduction of new forms of public management.

The use of outsourcing and temporary work, fixed-term contracts, partime jobs, and so on, has spurred the increase in precariousness. These processes accentuate the gap between permanent workers, whose jobs are still relatively protected, and those of precarious workers involved in outsourcing or in particularly dangerous work (handling, maintenance, cleaning, waste management).

Figures about exposure to carcinogens exist mainly for the more dangerous of these types of jobs. A worker in France is ten times more likely to die of cancer before age sixty-five than a senior manager. Occupational cancers remain largely unknown, however, because of what Annie Thébaud-Mony has called triple invisibility: toxic ignorance, or the lack of knowledge concerning the toxicity of thousands of chemicals that are introduced into production; physical invisibility, or the imperceptible nature of carcinogens, coupled with the lack of information for workers exposed to these risks; and social invisibility, the very low recognition of these cancers in occupational disease analyses. Finally, we should highlight the massive relocation of pathogenic work environments to impoverished areas in Asia, Africa, and Latin America.29

The neoliberal period has also seen the gradual dismantling of public services, leading to the closure of facilities in certain regions.30 Therefore, for suburban inhabitants or residents in rural areas, the constraints of geographical mobility (deficiency of public transport networks, cost of transporation, and so on) reinforce their economic precarity. These two types of spaces are the site for the expression of a specific type of inequality. Unemployment and precarious employment are suburban facts, and the inactivity of women is an important marker in many rural areas. A low level of qualification and training are markers of the popular classes in rural areas, while the new migrant populations arrive in cities.

Youth and migrant workers bear the brunt of difficult working conditions and low wages. Women are more concentrated than men in sectors where work is arduous (shift work, heavy lifting, repetitive work under severe time constraints, sexual harassment, and toxic dangers). They are also disproportionately present in the growing sector of personal services (domestic workers, child care, elder care)—between self-employment and wage labor. These jobs are often painful and humiliating. Finally, it is women who, overwhelmingly, ensure that family and domestic work is met—the “double burden of domestic labor.” Moreover, despite thirty years of feminist demands, differential labor conditions between men and women are still some of the strongest manifestations of gender inequality.

Slow progress toward gender equality hindered

Since the 1960s and 1970s, the increase in enrollment in education for girls, the development of professional activity of women, and control over their own reproduction have contributed to a structural transformation in the relationship between men and women. The second wave of the feminist movement, between 1970 and 1976, was a product of this transformation and it in turn was strengthened by enabling advances concerning the right of women to control their own bodies.

However, despite undeniable progress, inequalities persist in as many areas of the domestic sphere as in public spaces, or in professional life, largely because women bear the brunt of the neoliberal turn, especially in the undermining of public services and the welfare state, in three main ways. As workers in these sectors, they face a deterioration in their working conditions, or even the complete disappearance of their jobs as a result of privatization, downsizing, or outsourcing. Furthermore, women are disproportionately affected as beneficiaries of social programs whose disappearance or deterioration will be accentuated with the replacement of welfare with workfare in several countries, the disappearance of certain services for mothers of young children in the countries of Eastern Europe, and so on. As substitutes for failing public services, women must take on an increasing share of the care of dependents (children, elderly, handicapped, or sick people). Women who are assigned to this work, when it is socialized, are also migrants who often come from poorer countries. We must therefore take into account, in the analysis of these changes, the “international chains of care,” resulting in the influx of women working in this immense sector coming from across the Maghreb, of sub-Saharan Africa, Turkey, Eastern Europe, Latin America, or Southeast Asia, including the Philippines.

Since the 1970s, the analysis of class inequality has been progressively enriched and made more complex, but also partly obscured, by the inclusion of other inequalities: between men and women, between age groups and generations, between native-born and immigrants, between groups based on race, and so on. These changes are due not only to the development of specific struggles (women, youth, immigrant populations in Western metropolises, antiracist struggles, struggles against social and residential segregation, and so on), but also to ideological debates and theoretical developments that have accompanied them. This has allowed us to raise to the level of scientific objects hitherto neglected or even ignored aspects of social reality (for example, domestic work, the color line, the effects of neighborhoods, and so on), and have led to the development of new concepts: gender and gender relations, sexual division of labor, social relations by generation, spatialization of social inequality, and so on. They thus tasked the social sciences with the difficult problem concerning the relationship between these different types of inequalities, taking account of the phenomena of power (domination or oppression) and social relations that engender them, for example, that for which the concept of intersectionally attemps to account.

The complexity of these analyses must not lead us to lose sight of the renewal of inegalitarian discourse. Equality was subjected to an important right-wing attack during the 1980s under the guise of a criticism of egalitarianism. The defense of inequality over the last thirty years has been established by various ideological currents: Not surprisingly by mainstream sectors, also by left-wing governments. A whole series of adjectives (modern, new, efficient, clear, and even liberal) characterize these so-called left governments. For example, the French prime minister Manuel Valls wanted to “end the nostalgic left, the one which limits itself to a bygone era and nostalgic past, haunted by the Marxist superego and the memory of the postwar boom. The only valid question is how to steer modernity to accelerate the empowerment of individuals.”31 A few months later he would specify that “the Left also has a duty to clarity and truth,” to justify the continuation of neoliberal policies.32 The anti-equality platitudes are now defended by the most conservative members of this “left” government, who no longer hesitate to openly extol the virtues of inequality—each of them bringing something to the table. In January 2015 economic minister Emmanuel Macron did not hesitate to take the side of Guizot: “We need young French people who want to become billionaires.” He added that he preferred that “people who have talent and who take risks are highly paid, rather than having an economy of fading recipients of annuities.”33

These antiegalitarian platitudes are articulated around three well-known themes: Equality is above all synonymous with uniformity; inequality is then defended in the name of the right to difference. The argument is based on a double conflation of equality and identity, on the one hand, and of inequality and difference on the other. Moreover, the argument goes, equality creates inefficiency. Guaranteeing everyone an equal social status demotivates people and ruins the foundations of rivalry and competition, and is therefore counterproductive both for the individual and for the community. Inequalities ultimately benefit everyone, both the “losers” and “winners.” The inegalitarian discourse rests mainly on this third argument: equality would mean constraint, alienation of liberty, up to and including the limitations on a “free functioning of the market.” It would inevitably open the way to the worst of totalitarian hells.

However, while equality does imply identity (or uniformity), inequality does not guarantee difference. Equality of social conditions can open multiple opportunities for action and existence, which are more favorable to the affirmation of singularities. Market-generated inequalities lead to mass unemployment and ecological disaster. Finally, inequality oppresses. What is freedom for the unemployed, the stressed part-time worker, the illiterate, or those whose lives are shortened by overwork? The only freedom that guarantees inequality is the right of a minority to accrue material benefits and privileges, both institutional and symbolic, at the expense of the majority.34