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Europe has significantly reduced inequality in recent years. Here’s how

A homeless person in Europe, which has reduced poverty and inequality in recent years.
Photo: Dreamstime

The European Union has made significant progress in reducing inequality in recent years, according to a new report by the bloc’s statistical office, Eurostat.

The study, which gauges how the EU is faring against the United Nations’ Sustainable Development Goals, finds that the region is failing in some areas but is on track in others. It’s doing poorly when it comes to things like the provision of clean water and sanitation, for instance, but particularly well in terms of narrowing the gap between the rich and poor.

In 2021, the combined income of the richest 20% of the EU’s population was 4.74 times higher than that of the poorest 20%. That’s down from 5.22 in 2013, and 5.03 in 2016.

Graphic: Eurostat

Similarly, the report shows that differences between EU member states in terms of GDP per capita and household incomes are narrowing. The coefficient of variation in gross household disposable income between EU states declined to 23.6% in 2022, which is 3.2 percentage points less than in 2017 and an 8.8 percentage point improvement from 2007 levels.

The labour market integration of migrants from outside the EU also improved, while the gender pay gap narrowed by 1.9 percentage points in the five years to 2022.

Graphic: Eurostat

Why it matters: High levels of inequality hamper social cohesion, hinder economic activity, reduce social trust in institutions, undermine democratic participation, and lead to disproportionate exposure to things like climate change and pollution, Eurostat says.

Children who grow up in poorer households are substantially less likely to fulfil their potential owing to weaker health and educational foundations.

Without specific policies to level the playing field, inequality could get worse as technological innovation favours those with specific skills or accumulated wealth, and the shift to clean energy threatens livelihoods, Eurostat adds.

Behind the progress: The stats body flags a range of interventions that have helped to narrow the gap between the rich and poor.

Among them are early childhood education and care programmes, which are “cost effective” investments that help kids to succeed at school and give them a better chance of being integrated into the labour market and social life when they’re adults.

“These positive effects are on average stronger among children from socioeconomically disadvantaged backgrounds, suggesting that early childhood education and care is a key factor in reducing inequality of opportunity,” Eurostat says.

Of the EU’s population aged between three years and the starting age of compulsory primary education, 92.5% are in the early childhood education system.

Some states are leading the way. The likes of Denmark and Slovenia, for instance, have no “childcare gap” — a metric that refers to a period in which families with young children are unable to benefit from childcare leave or a guaranteed place in early childhood care.

Meanwhile, Eurostat says the European Social Fund Plus, which has a budget of €142 billion for the period between 2021–2027, has made a dent in inequality as well. The programme “contributes to equal opportunities for children, a fair start for young people, more inclusive labour markets, and social integration for more disadvantaged people.”

That’s complemented by the Fund for European Aid to the Most Deprived, which supports the most vulnerable in society by providing them with food and basic material assistance.

Tags: Early childhood education, Eurostat, GDP per capita, Inequality

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