Inequalities unmasked: Reality of disparities across the EU

Part of the blog series: '10 reasons to Use Your Vote'

2 May 2024

In the lingering legacy of recession, the wake of the pandemic, and against the backdrop of a cost-of-living crisis, inequalities have become more apparent in many areas: between men and women; between rich and poor; between young and old; and between rural and urban areas. <_o3a_p>

While reaction to such inequality visibly manifests itself in public protest, the impact goes much deeper, permeating our workplaces, degrading our labour market and increasing tensions in our society. <_o3a_p>

So, what are the implications of these inequalities across the EU?

Gender inequalities persist<_o3a_p>

The fact is that despite significant progress, the gender pay gap still stands at 13% and the gender employment gap at just over 9%. This is before you even start to consider occupational, sectoral and working conditions differences. Gender inequalities are still very much alive and well.<_o3a_p>

While the impact of the COVID-19 pandemic on the labour market was remarkably gender-neutral at EU level, job loss for women was most prevalent among the lowest-paid workers, while for men it was more evenly distributed. <_o3a_p>

Similarly, we see the gender employment gap (9% in 2020) continuing to narrow: around 46% of EU workers are women compared to 40% a generation ago. However, this has stagnated in recent years and stood at 10.8 percentage points in 2021, costing the EU €320 billion annually because of lost earnings and welfare contributions due to women's exclusion from employment and public finance costs due to social welfare benefits received by non-working women.<_o3a_p>

Two out of three net new jobs in the EU over the last two decades have been taken up by women, and this increase has been strongest among women over the age of 30. Despite this, women continue to be significantly overrepresented in low-paying jobs. There are more women than men among the low-paid and minimum wage earners in nearly all EU Member States.<_o3a_p>

The good news is that female employment has been growing faster than male employment in the highest-paying jobs (those accounting for the top 20% of employment by average wage). However, this is where the gender pay gap is greatest. While women earn 13.0 % on average less per hour than men, at managerial levels there is an even larger gap: 23 % lower earnings for women than for men (2021 data).<_o3a_p>

This is a common pattern across Member States, notwithstanding younger women increasingly outperforming younger men in educational attainment. Interesting also, we see that variable forms of pay - such as shares in the company or payments based on company performance - are increasing more rapidly among men than women. Given these forms of pay are becoming more common, this trend could further widen the gender pay gap. <_o3a_p>

But gender inequalities in employment stretch well beyond labour market segmentation and gender pay gaps. The working conditions and job quality that women and men experience across countries, sectors and occupations also vary greatly. Men report higher levels of quantitative demands at work, whereas women are much more likely to report exposure to emotional demands or find themselves in emotionally disturbing situations. Furthermore, women are underrepresented as managers in almost all economic sectors. Women also tend to work fewer paid hours than men and adjust their working time to the needs of their families. As a result, their perception of work-life balance is more positive than that of men (82% of women compared with 80% of men). However, women experience more conflicts between working and private life than men - they worry more about work, feel more exhausted and have a bigger burden of housework to face (74% of women did daily housework and cooking in 2021, compared with 42% of men). And overall, when paid and unpaid work are combined, women do eight full-time weeks more work per year than men.

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Income inequality <_o3a_p>

The fact is that the gap between rich and poor is increasing in older EU member states (pre-2004) and decreasing in newer EU member states. Added to this, the share of people below the poverty income threshold increased across most EU member states between 2006 and 2021. <_o3a_p>

Although the worst of the pandemic was avoided in terms of its effect on income levels and income inequality levels, the share of people below the poverty income threshold has increased in two-thirds of EU Member States between 2006 and 2021, and in more than half in 2021. What's more, non-income data for 2022, focusing on the early stages of the cost-of-living crisis, reflect the growing financial difficulties faced by households, especially those most vulnerable. For instance, single parent households are more at risk of energy poverty, and women living alone are more likely to be negatively affected by energy poverty outcomes.<_o3a_p>

There is vast disparity across countries - with the 13 new Member States that joined the EU after the enlargements in 2004 and 2007 experiencing increasing convergence and remarkable income growth. In many cases, this growth has been stronger among lower-income earners, thereby reducing income inequalities.<_o3a_p>

On the other hand, income growth has been more moderate among the 14 Member States that joined the EU prior to 2004, especially among the lowest-income earners in many cases, leading to growing income inequalities (and shrinking middle-income classes). This occurred in Scandinavian and most continental countries. Mediterranean countries offer the most disappointing picture between 2006 and 2021: their income levels progressed generally less than among Scandinavian and continental countries (although this resulted in declines in income inequality in some of them), so they failed to significantly converge towards higher income levels as the newer 13 EU Member States did.<_o3a_p>

The welfare state plays a very important role in cushioning market income inequalities, which according to an upcoming Eurofound report, are reduced by an average of around 42% across EU Member States once social benefits and taxes are taken into account. This inequality-reducing effect of the welfare state is stronger in most Scandinavian, continental and in a few central and eastern European countries, while it is weaker in other central and eastern European and mediterranean countries.Nevertheless, income inequalities surged between 2006 and 2021 among many of those countries where this inequality-reducing effect of the welfare state has eroded (such as in several Scandinavian and continental countries). Conversely, income inequalities tended to decline among those countries where the role of the welfare state was reinforced.

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Inequalities between the young and old <_o3a_p>

The fact is there are intergenerational differences between young and old. But depending on the indicators - income, housing, employment and work, and health- the impacts differ across age groups. <_o3a_p>

Europe's ageing population continues to have implications for the future in relation to employment, working conditions, living standards and welfare. The impact of the various crises has been uneven across age groups and much is said about the intergenerational divide - but does it actually exist?<_o3a_p>

In some areas, both the old and young have been impacted in similar ways. For example, mental health deteriorated for people of all ages during the pandemic but affected young people and the 80+ age group most severely. <_o3a_p>

However, in others, such as work and employment, there are marked differences. More young people lost their jobs during the pandemic than any other age group, while the share of older workers in the labour market has grown since 2007, driven by employment expansion among people aged 50 and older, especially women (albeit perhaps also driven by inadequate pensions and rising cost of living). Employment has grown at a far slower pace among young age groups, with considerable declines during the 2008-2012 economic crisis and the COVID-19 pandemic. <_o3a_p>

Similar differences are seen in incomes that have grown most since 2008 for the population aged 60 and over. For instance, in southern Europe the income of the oldest age group has increased, while that of the youngest age group has decreased. By contrast, in eastern European countries people aged under 60 have fared better than those aged 60 and over in recent years. Both decreases and increases in income were less common among older people, for whom pensions are a stable source of income. The share of benefits (especially pensions) directed towards the population aged 60 and over has also increased substantially in the past two decades, especially in southern European countries. This has resulted in an increasing share of public benefits being distributed to individuals with the highest incomes. By contrast, income trends among younger groups are mostly driven by employment - or the lack thereof.<_o3a_p>

And on the critical issue of housing, renting has increased generally, but especially among those aged 30-39, rising from 38% to 45% between 2010 and 2019. Homeownership is more common among people aged above 40 than among people aged 18-40. Housing costs have increased more for renters (by 23%) than for homeowners (by 8%) between 2010 and 2019, deepening an already existing gap between the two groups.

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Rural-urban divide<_o3a_p>

The fact is there are growing rural­-urban divides, particularly in employment and income, which are manifesting in different ways. These inequalities, and the perceived lack of recognition, are breeding obvious discontent. <_o3a_p>

The farmers' protests across Member States have placed the rural­-urban differences in sharp focus, raising questions about inequalities in this area.<_o3a_p>

And yes, notable gaps in income and living conditions persist between rural and urban areas. While there has been a general increase in the employment rate over the past decade, the rate has increased faster in urban areas than in rural areas. Added to the fact that median incomes are higher in urban areas in almost every Member State, we are witnessing deepening inequalities and a rural-urban gap that has increased by almost 20% in 10 years. <_o3a_p>

Alongside the rural-urban income inequality, signs point to several avenues of inequality of opportunity between rural residents and their urban counterparts. For example, employment levels remain, on average, persistently higher in cities than in rural areas. Despite a temporary drop in employment around the time of the COVID-19 pandemic, employment rates have increased across each degree of urbanisation over the past decade. However, they have increased slightly faster in urban areas resulting in a marginal widening of the rural-urban employment gap. <_o3a_p>

Moreover, we also see growing rural-urban gaps in human capital accumulation, which may determine people's pathways to subsequent employment opportunities. On average, 55% of adults across the EU aged 25-34 and living in cities have a tertiary-level of education, compared to just 34% of those in rural areas. <_o3a_p>

A digital divide, both in terms of skills and infrastructure, is also evident with those living in cities, on average, more likely to have digital skills, more likely to have a computer in their household and have access to significantly better broadband connections.<_o3a_p>

However, it is not all bad for rural residents - they do enjoy an advantage in certain living conditions, most notably in terms of housing where they are less likely to be overburdened by housing costs. They are also less likely to live in a dark dwelling and they can better afford to keep their homes warm. Those in rural areas also suffer less from problems in their neighbourhoods, including pollution and grime as well as crime and vandalism. <_o3a_p>

Addressing inequalities across the EU<_o3a_p>

Inequalities persist across the EU, ranging from gender and employment pay gaps, intergenerational disparities and rural­­-urban differences. While EU-wide income inequality levels declined significantly between 2006 and 2021, the share of people below the poverty threshold increased across most EU Member States. The gap between the rich and poor continues to grow in some countries. These realities highlight the urgent need for concentrated efforts and targeted policies to mitigate such deep-rooted inequalities and create a fairer future for the EU.

Image© Johnér/Adobe Stock