Europe’s Ticking Time Bomb: Wage Inequality
Did you know that inequality is rising? This is because the top 20% of Europeans earn five times more than the bottom 20%?
We know inequality is the result of faster income growth at the top and slower than average growth at the bottom, and it’s been this slow growth of wages at the bottom that’s been the main issue facing Europe since the financial crisis.
While the impact has been felt the most in countries like Romania and Portugal, it’s also been felt in Italy, and even in Germany.
Minimum wages are different for families across Europe. To better understand the lay of the European landscape, here is our crash course.
Average wages – an unequal landscape
- The Mullers live in countries where they earn €1,450 or more a month (in Belgium, France, Germany, Ireland, Luxembourg, Netherlands and the United Kingdom).
- The Potamianos earn between €650 to €900 (in Greece, Malta, Portugal, Slovenia and Spain)
- The Baditas earn €500 or less ((Croatia, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania and Slovakia))
- Anne and Jodi Newman make less than the men – and for them, gender pay gap is stark (16.2% on average).
- Anne lives in Estonia which has the highest gender pay gap (25.3 %) But Romania-based Jodi’s gap is the lowest (5.2 %).
- The Newman family, like most Europeans, work in the service sector, making high-end wages (since 2013 71% of jobs have been in services).
- Europe’s consumption-led growth means a lot of jobs created for people like Steve Newman– but at the lower end of the wage spectrum.
- So, to earn more, he like other Europeans wants to move to another country (12% of Europeans migrate for work).
- In Eastern Europe or some Mediterranian countries, Steve would earn less than €9,000 a year.
- In the EU-15 he’d earn more than €25,000.
- But if he makes it to the top 1% of earners in France, UK, Germany or Italy, Steve could make more than €62,000 per year.