Page 25 - ASEAN-EU Dialogue 2018: Regional and Inter-Regional Economic Cooperation: Identifying Priorities for ASEAN and the EU

Chapter Five
EU Sustainable Development and Income Equity
Corrado G. M. Letta

Inequality within the European Union
The problem of inequality in Europe is – according to the report “The EU Public Finances 2017”
(European Commission, 2017) – one of focusing. Indeed, focusing on income inequality blurs
the overall picture of inequality and therefore the possibility of gaining a comprehensive
understanding of it. As a matter of fact, inequality is generated not by one single factor, income
inequality, but, instead by seven different factors. They are: (a) differences between the 28
countries of the European Union, (b) differences within countries members of the European
Union, (c) income and wealth inequality, (d) jobs and labour markets changes in the socio-
economic divide, (e) social divide in education and human capital development, (f) socio-
economic divides in health and (g) immigrant integration.

In the 1980s, the average disposable income of the richest 10 per cent was around seven times
that of the poorest 10 per cent; today, it is around nine and half times higher. The gap in
household wealth is even wider: the 10 per cent wealthiest households hold half of total wealth
while the bottom 40 per cent own barely 3 per cent. People in the north-west Europe (France,
Germany and the Netherlands) make the most. People in Southern Europe (Spain and Italy)
make somewhat lesser. People in Eastern Europe (Romania and Poland) make the least. In
Germany, one in six people is now at risk of poverty. From 2009 to 2014, about 800,000 people
have left Spain. In Greece, one third of the people has no health insurance and no access to
health care. In France, the police and gendarmerie are now worried about the situation within
hospitals and the tensions surrounding hospital emergencies.

What is the EU doing about it?
Early theorists of European integration speculated that economic integration would lead to
political integration and a European identity. The fact is that a European identity has not
displaced national identities in the EU, but, for some significant share of EU citizens, a
European identity exists alongside a national identity. At the same time, political parties
asserting more traditional nationalist identities and policies have directed their dissatisfaction
against immigrants, foreigners, and sometimes, the EU. Those who participate in “Europe” are
more likely to develop a European identity, while those whose economic and social horizons
are essentially local are more likely to assert national identities.

What the European Union is doing about this problem can be summarized as: a) It recognizes
that a basis for stable democracy is social cohesion-consolidation of plurality of citizenship and
reducing inequality and socio-economic disparities and fractures in the society, b) It appreciates
that social cohesion refers to people’s relationships and interactions in society, including the
role of citizenship. Democracy and social cohesion are complementary parts of including in
the public decision-making active citizenship with both rights and responsibilities, c) It has
become highly aware of the evidence that slow progress in living standards and widening
inequality have contributed to political polarization and erosion of social cohesion, which has
led to the emergence of a European consensus on the need of a more inclusive and sustainable
model of growth and development that promotes high living standards. Raising skill levels and
preparing people for the jobs of tomorrow is the first way to address inequality in earnings.
Last year, the EU adopted the New Skills Agenda. With the right skills, people are better
equipped for good-quality jobs with reliable and adequate incomes. Moreover, “we must create
jobs” seems to be the mantra in the European Parliament. Subsequently they debate that “we

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