Social Europe

  • EU Forward Project
  • YouTube
  • Podcast
  • Books
  • Newsletter
  • Membership

Europe-wide inequality during the pandemic

Michael Dauderstädt 13th December 2022

The pandemic increased inequality among member states but Europe-wide inequality has continued to decline, if more slowly.

inequality,Gini,quintile ratio,S80/S20,Europe,EU,European Union,CEE
Kurzarbeit (short-time working) and furlough schemes protected incomes in prosperous EU member states amid lockdowns (michaket/shutterstock.com)

As the pandemic turns endemic and most restrictions—let alone lockdowns—fade, we can reflect on its impact on the distribution of income in Europe, among and within countries. Eurostat has now published the relevant 2021 data, unavailable at the time of our last analysis.

The pandemic hit some countries harder than others (figure 1). Southern Europe, which depends much more on tourism, suffered most. Between the years 2019 and 2020, average gross domestic product per capita decreased in the Mediterranean region by 8.5 per cent, compared with a decline of 2.2 per cent in central and eastern Europe (CEE) and 2.7 per cent for the rich northwest of the European Union.

In 2021, most EU member states recovered quickly, but unevenly. Between 2019 and 2021 (inclusive), GDP per capita increased on average among them by 3.6 per cent, but it still declined in Spain by 3.7 per cent. Southern Europe generally declined by 1.3 per cent, while the poorer CEE managed to grow by 8.4 per cent (the Baltic states were the star performers with rates above 12 per cent) and the rich northwest achieved a more modest growth rate of 4.4 per cent. If we look at the EU as a whole, the variance of country per capita incomes, which had decreased since 2014 (then 0.71), increased from 0.65 to 0.69 during the pandemic, indicating renewed divergence.

Figure 1: per capita GDP growth of major EU country groups, 2013-21

inequality,Gini,quintile ratio,S80/S20,Europe,EU,European Union,CEE
Source: Eurostat and author’s calculations. CEE = 3 Baltics, Poland, Hungary, Czechia, Slovakia, Slovenia, Croatia, Romania, Bulgaria; Mediterranean = Portugal, Spain, Italy, Greece, Cyprus, Malta; Northwest = Ireland, Benelux, France, Germany, Austria, Denmark, Sweden, Finland.

Figure 1 also shows the different long-run fate of the EU’s two poorer peripheries. While the CEE region continued to catch up with the rich core, growing by 54 per cent since 2013, southern Europe—although on average richer by somewhat more than €10,000 per person per year than the CEE group—managed only 14.3 per cent, compared with the core’s 23 per cent, thus not achieving convergence.

Most incomes protected

Within individual countries, the major impact of lockdowns was sectoral, harming certain industries such as tourism, restaurants and hotels. In these industries rich owners suffered as well as poorer employees. But states answered with huge spending programmes, including furlough, which prevented a strong rise in unemployment. Thus, most incomes were protected to a considerable extent.

The Gini coefficient is a measure of inequality, ranging from 0 (perfect equality) to 100 (absolute inequality). Averaging trends across states, the Gini coefficient of incomes before taxes and social transfers increased (from 50.2 in 2019 to 52.2 in 2021) but the (always much lower) Gini of disposable income even decreased slightly, from 30.2 in 2019 to 30.1 in 2021, indicating declining inequality. The same result can be seen when we use the quintile ratio (S80/S20) of the incomes of the richest to the poorest fifths of the population. Its average value, measured by Eurostat, also declined slightly, from 4.99 to 4.97 (figure 2).



Don't miss out on cutting-edge thinking.


Join tens of thousands of informed readers and stay ahead with our insightful content. It's free.



This relatively rosy picture overall hides however some discrepant national performances. Again, southern Europe had the worst outcomes, with strongly rising quintile ratios in Malta (+0.85), Greece (+0.68), Portugal (+0.5) and Spain (+0.25)—these four countries showing the highest jumps in inequality. Constraints on social spending, due to already high debt in the context of the EU fiscal rules, might be one cause. Other countries saw inequality declining by similar amounts: in Luxemburg, the EU’s richest country, the quintile ratio decreased by 0.75 and, surprisingly, in Bulgaria (the poorest and most unequal member state) it fell by 0.65.

Continued catch-up

Combining between- and within-country inequality, we can determine the income distribution across all households of the EU, using EU-SILC (the Survey of Income and Living Conditions). This provides data on disposable income for approximately 130,000 households. These incomes have however different purchasing power in their respective countries. Therefore inequality should be measured in two ways: using exchange rates to standardise against the euro and applying purchasing power standards (PPS) to adjust for the differential cost of a basket of goods.

To reduce the numbers to be analysed we apply the quintile method, comparing the average incomes of each of the 135 quintiles of the EU population (27 countries timS20es 5 quintiles). Assembling the appropriate national quintiles we construct the EU-quintiles, with about 88 million people each, and calculate the quintile ratio by dividing the income of the richest EU quintile by the income of the poorest (figure 2).

Figure 2: EU-wide inequality (S80/S20 ratio) 2005-21

inequality,Gini,quintile ratio,S80/S20,Europe,EU,European Union,CEE
Source: Eurostat and author’s calculations. EU28-UK includes UK until 2019.

EU-wide inequality has declined since 2015, after a prolonged phase of stagnation. The major cause has been the strong growth of the poorer CEE countries—whose poorer quintiles make up the bulk of the poorest EU quintile—while within-country inequality has hardly changed. As this welcome catch-up growth continued during the pandemic the overall trend continued too, albeit at a slower rate.

The terrible performance of the Mediterranean periphery hardly affects this development, as they belong to the middle-income group of member states. Given that, it seems most appropriate that the EU is supporting the heavily affected countries through the NextGenerationEU recovery programme. One has also however to consider that the newest crisis hitting Europe—the war between Russia and Ukraine—is likely to affect the eastern periphery more than the south, possibly changing their relative fates.

Pics
Michael Dauderstädt

Michael Dauderstädt is a freelance consultant and writer. Until 2013, he was director of the division for economic and social policy of the Friedrich Ebert Stiftung.

Harvard University Press Advertisement

Social Europe Ad - Promoting European social policies

We need your help.

Support Social Europe for less than €5 per month and help keep our content freely accessible to everyone. Your support empowers independent publishing and drives the conversations that matter. Thank you very much!

Social Europe Membership

Click here to become a member

Most Recent Articles

u4219834676 bcba 6b2b3e733ce2 1 The End of an Era: What’s Next After Globalisation?Apostolos Thomadakis
u4219834674a bf1a 0f45ab446295 0 Germany’s Subcontracting Ban in the Meat IndustryŞerife Erol, Anneliese Kärcher, Thorsten Schulten and Manfred Walser
u4219834dafae1dc3 2 EU’s New Fiscal Rules: Balancing Budgets with Green and Digital AmbitionsPhilipp Heimberger
u42198346d1f0048 1 The Dangerous Metaphor of Unemployment “Scarring”Tom Boland and Ray Griffin
u4219834675 4ff1 998a 404323c89144 1 Why Progressive Governments Keep Failing — And How to Finally Win Back VotersMariana Mazzucato

Most Popular Articles

u4219834647f 0894ae7ca865 3 Europe’s Businesses Face a Quiet Takeover as US Investors CapitaliseTej Gonza and Timothée Duverger
u4219834674930082ba55 0 Portugal’s Political Earthquake: Centrist Grip Crumbles, Right AscendsEmanuel Ferreira
u421983467e58be8 81f2 4326 80f2 d452cfe9031e 1 “The Universities Are the Enemy”: Why Europe Must Act NowBartosz Rydliński
u42198346761805ea24 2 Trump’s ‘Golden Era’ Fades as European Allies Face Harsh New RealityFerenc Németh and Peter Kreko
startupsgovernment e1744799195663 Governments Are Not StartupsMariana Mazzucato
u421986cbef 2549 4e0c b6c4 b5bb01362b52 0 American SuicideJoschka Fischer
u42198346769d6584 1580 41fe 8c7d 3b9398aa5ec5 1 Why Trump Keeps Winning: The Truth No One AdmitsBo Rothstein
u421983467 a350a084 b098 4970 9834 739dc11b73a5 1 America Is About to Become the Next BrexitJ Bradford DeLong
u4219834676ba1b3a2 b4e1 4c79 960b 6770c60533fa 1 The End of the ‘West’ and Europe’s FutureGuillaume Duval
u421983462e c2ec 4dd2 90a4 b9cfb6856465 1 The Transatlantic Alliance Is Dying—What Comes Next for Europe?Frank Hoffer

Hans Böckler Stiftung Advertisement

WSI Report

WSI Minimum Wage Report 2025

The trend towards significant nominal minimum wage increases is continuing this year. In view of falling inflation rates, this translates into a sizeable increase in purchasing power for minimum wage earners in most European countries. The background to this is the implementation of the European Minimum Wage Directive, which has led to a reorientation of minimum wage policy in many countries and is thus boosting the dynamics of minimum wages. Most EU countries are now following the reference values for adequate minimum wages enshrined in the directive, which are 60% of the median wage or 50 % of the average wage. However, for Germany, a structural increase is still necessary to make progress towards an adequate minimum wage.

DOWNLOAD HERE

S&D Group in the European Parliament advertisement

Cohesion Policy

S&D Position Paper on Cohesion Policy post-2027: a resilient future for European territorial equity

Cohesion Policy aims to promote harmonious development and reduce economic, social and territorial disparities between the regions of the Union, and the backwardness of the least favoured regions with a particular focus on rural areas, areas affected by industrial transition and regions suffering from severe and permanent natural or demographic handicaps, such as outermost regions, regions with very low population density, islands, cross-border and mountain regions.

READ THE FULL POSITION PAPER HERE

ETUI advertisement

HESA Magazine Cover

With a comprehensive set of relevant indicators, presented in 85 graphs and tables, the 2025 Benchmarking Working Europe report examines how EU policies can reconcile economic, social and environmental goals to ensure long-term competitiveness. Considered a key reference, this publication is an invaluable resource for supporting European social dialogue.

DOWNLOAD HERE

Eurofound advertisement

Ageing workforce
The evolution of working conditions in Europe

This episode of Eurofound Talks examines the evolving landscape of European working conditions, situated at the nexus of profound technological transformation.

Mary McCaughey speaks with Barbara Gerstenberger, Eurofound's Head of Unit for Working Life, who leverages insights from the 35-year history of the European Working Conditions Survey (EWCS).

Listen to the episode for free. Also make sure to subscribe to Eurofound Talks so you don’t miss an episode!

LISTEN NOW

Foundation for European Progressive Studies Advertisement

Spring Issues

The Summer issue of The Progressive Post is out!


It is time to take action and to forge a path towards a Socialist renewal.


European Socialists struggle to balance their responsibilities with the need to take bold positions and actions in the face of many major crises, while far-right political parties are increasingly gaining ground. Against this background, we offer European progressive forces food for thought on projecting themselves into the future.


Among this issue’s highlights, we discuss the transformative power of European Social Democracy, examine the far right’s efforts to redesign education systems to serve its own political agenda and highlight the growing threat of anti-gender movements to LGBTIQ+ rights – among other pressing topics.

READ THE MAGAZINE

Social Europe

Our Mission

Team

Article Submission

Advertisements

Membership

Social Europe Archives

Themes Archive

Politics Archive

Economy Archive

Society Archive

Ecology Archive

Miscellaneous

RSS Feed

Legal Disclosure

Privacy Policy

Copyright

Social Europe ISSN 2628-7641

BlueskyXWhatsApp