inequality and the crisis : the story from europe · story from europe . from inequality to euro...

INEQUALITY AND THE CRISIS : THE STORY FROM EUROPE

FROM INEQUALITY TO EURO CRISIS

A BIT MORE COMPLICATED STORY IN THE EURO AREA (1)

A BIT MORE COMPLICATED STORY IN THE EURO AREA (2)

Still too high for Germany’s depressed state of the economyFar too low for the ‘peripheral’ economies

-10

0

10

20

30

40

50

60

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

DE

IE

EL

ES

IT

CY

LU

MT

SL

SK

UNIT LABOUR COSTS 1999 = 100

CAPITAL FLOWS UNBALANCING THE EURO AREA

HOUSEHOLD DEBT LOADS

FROM CRISIS TO HIGHER INEQUALITIES

HEAVY FISCAL AUSTERITY ….

…. MAINLY ON THE EXPENDITURE SIDE

0

5

10

15

20

25

Euro Area Spain Greece Ireland Portugal Italy UK France Belgium

Expenditure cuts

Tax hikes

POLICY OF INTERNAL DEVALUATION

ILLUSTRATION: DG ECIN’S « LABREF » DATABASE ON STRUCTURAL REFORMS

« An ‘employment friendly’ reform is a reform that ‘reduces the wage setting power of trade unions’ »

(Source: Labour Market developmentsreport from Autumn 2012)

IT « WORKS » (UNIT LABOUR COSTS SINCE 1999 UPDATED)

-5

0

5

10

15

20

25

30

35

40

99 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Belgium

France

Germany

Price stability line

Spain

Greece

INEQUALITY INCREASING AT THE BOTTOM OF THE INCOME DISTRIBUTION

ANCHORED POVERTY RATES

ANCHORED POVERTY RATES OF CHILDREN

CONCLUSION