SDG 10 - Reduced inequalities

Reduce inequality within and among countries


Data extracted in May 2020.

Planned article update: June 2021.

Highlights


EU trend of SDG 10 on reduced inequalities

This article provides an overview of statistical data on SDG 10 ‘Reduced inequalities’ in the European Union (EU). It is based on the set of EU SDG indicators for monitoring of progress towards the UN Sustainable Development Goals (SDGs) in an EU context.

This article is a part of a set of statistical articles, which are based on the Eurostat publication ’Sustainable development in the European Union — Monitoring report - 2020 edition’. This report is the fourth edition of Eurostat’s series of monitoring reports on sustainable development, which provide a quantitative assessment of progress of the EU towards the SDGs in an EU context.

SDG 10 addresses inequalities within and among countries. It calls for nations to reduce inequalities in income as well as those based on age, sex, disability, race, ethnicity, origin, religion or economic or other status within a country. The goal also addresses inequalities among countries, including those related to representation, and calls for the facilitation of orderly and safe migration and mobility of people.

Full article

Reduced inequalities in the EU: overview and key trends

Monitoring SDG 10 in an EU context focuses on inequalities within countries, inequalities between countries, and migration and social inclusion. While economic disparities between EU countries have reduced over time, income inequalities within Member States have stagnated. In addition, while the number of asylum applications has fallen in recent years, the EU still faces challenges regarding migrant integration, monitored here by analysing differences in social and labour market inclusion between home country nationals and non-EU citizens.

Inequalities within countries

High levels of inequality harm society in many ways. They can hamper social cohesion, result in lost opportunities for many and reduce social trust in institutions [1]. Among other factors, technological innovation and financial globalisation, by favouring people with specific skills or accumulated wealth, have been important driving forces behind rising inequality within countries [2]. Similarly, the transition to a climate-neutral society will have to be managed well to prevent a rise in inequalities [3].

The income gap between the rich and the poor in the EU remains large

Analysing income distribution is one of the ways to measure inequality within EU countries. The income quintile share ratio compares the income received by the 20 % of the population with the highest equivalised disposable income with that received by the 20 % with the lowest equivalised disposable income. The higher this ratio, the bigger the income inequality. In the EU, this ratio has increased slightly since 2010, reaching a ratio of 5.1 in 2018. This means that the income of the richest 20 % of households was about five times as much as that of the poorest 20 %.

Reflecting the trend in the income quintile share ratio, the income share of the bottom 40 % of the population in the total equivalised disposable income has stabilised at a low level, reaching 21.2 % in 2018. According to the 2019 Annual Review of Employment and Social Developments in Europe [4], 9 % of adults in low-income households were in debt and a further 14 % drew on savings to cover current expenditure in 2017, compared with 4 % and 9 %, respectively, for the total population [5].

Figure 1: Income distribution, EU-27, 2010-2018 (income quintile share ratio)
Source: Eurostat (sdg_10_41)


Figure 2: Income share of the bottom 40 % of the population, EU-27, 2010-2018 (% of income)
Source: Eurostat (sdg_10_50)


The extent and depth of poverty in the EU remain significant

Inequality and poverty are closely interrelated. The distribution of resources within a country has a direct impact on the extent and depth of poverty. In 2018, 94.8 million people were at risk of poverty or social exclusion. However, these 94.8 million people were not equally distributed over cities and rural areas. In 2018, 21.4 % of people living in cities were in this situation, compared with 23.6 % of people living in rural areas. With a 2.2 percentage point difference, the gap between cities and rural areas at EU level has therefore almost closed compared with 2010, when it amounted to 7.8 percentage points, mainly due to much higher poverty or social exclusion rates in rural areas (30.0 % in 2010). However, the overall EU figure masks the full scope of the broad variations among Member States’ gaps, with several countries reporting higher poverty rates in cities than in rural areas. Reasons for the higher risk of poverty in rural areas include an exodus and ageing of the population, remoteness, limited access to education and inefficient labour markets [6].

Furthermore, the median income distance of people at risk of poverty from the poverty threshold – the poverty gap – has increased. In 2018, this gap amounted to 24.5 % in the EU, which means the median income of those below the threshold was 24.5 % lower than the threshold itself. This represents a 1.4 percentage point widening of the gap since 2010, indicating an increase in the ‘depth’ of income poverty in the EU.

Figure 3: Relative median at-risk-of-poverty gap, EU-27, 2010-2018 (% distance to poverty threshold)
Source: Eurostat (sdg_10_30)


Inequalities between countries

We live in an interconnected world, where problems and challenges — be they poverty, climate change or migration — are rarely confined to one country or region. Therefore, combating inequalities between countries is important, not only from a social justice perspective, but also as a prerequisite for solving many interdependent problems. In particular, sharing prosperity and reducing trade barriers allow nations to cooperate on meeting global challenges, which by definition cannot be addressed by the EU alone. Cohesion between Member States is one of the objectives of the EU, as mentioned in the Treaty on European Union (article 3.3) [7].

Despite overall reduction in economic disparities, north–south and west–east divides between EU countries remain

Not only have economic performances, incomes and living standards improved across the EU as a whole over time, they have also been converging between countries. The two indicators used to measure this convergence show that inequalities between EU countries have decreased over the past 15 years.

The coefficient of variation in gross domestic product (GDP) per capita in the purchasing power standard (PPS) — expressed as the ratio of the standard deviation to the mean — shows that economic disparities in GDP per capita between Member States have narrowed slightly since 2003, reaching 42.1 % in 2018. According to the 2018 Annual Review of Employment and Social Developments in Europe [8], this improvement was mainly a result of rising GDP in countries that joined the EU in 2004 and later. Most of this convergence took place in the period leading up to the economic crisis of 2008. At Member State level, purchasing power adjusted GDP per capita was between 51 % and 263 % of the EU average in 2018.

While GDP per capita is used to measure a country’s economic performance, adjusted gross household disposable income provides an indication of the average material well-being of people. Gross household disposable income reflects households’ purchasing power and ability to invest in goods and services or save for the future, by taking into account taxes, social contributions and in-kind social benefits. The coefficient of variation in gross household disposable income between Member States has decreased over time, reaching 25.2 % in 2018. This figure is 4.7 percentage points less than in 2013 and a 14.9 percentage point improvement since 2003. At Member State level, the index of purchasing power adjusted per capita household income ranged from 50 % to 148 % of the EU average.

A clear north–south and west–east divide is evident when looking at the geographical distribution of GDP per capita and household income in the EU in 2018. EU citizens living in northern and western European countries with above average GDP per capita levels had the highest gross disposable income per capita. On the other end of the scale were eastern and southern EU countries, which displayed gross household disposable incomes and GDP per capita levels below the EU average.

Figure 4: Disparity in purchasing power adjusted GDP per capita, EU-27, 2000-2018 (coefficient of variation, in %)
Source: Eurostat (sdg_10_10)


Figure 5: Disparity in adjusted gross disposable income of households per capita, EU-27, 2000-2018 (coefficient of variation, in %)
Source: Eurostat (sdg_10_20)


Migration and social inclusion

The Syrian conflict, the ongoing war in Iraq and unstable situations in Afghanistan and some African countries have contributed to an unprecedented surge of migration into the EU over the past few years. The successful integration of migrants is decisive for the future well-being, prosperity and cohesion of European societies. To ensure the social inclusion of immigrants and their children, it is essential to strengthen the conditions for their participation in society, including their active participation in education and their integration into the labour market [9].

The number of asylum applications in the EU has fallen considerably since 2015

The urge to seek international protection is one of the main reasons that forces people to cross borders. In 2019, the EU received 612 685 first-time asylum applications (equalling 1 371 applications per million EU inhabitants), which is about half as many than at the height of the refugee crisis in 2015, but still a 5-fold increase compared with 2008. During 2019, 206 015 people were granted protection status at the first instance in the EU.

Despite a decline in the number of first time asylum seekers applying for international protection between 2017 and 2018, the most recent figure for 2019 showed an increase of 11.6 % compared to the previous year. The total number is again close to the level recorded in 2017, which marked a significant drop of 46.8 % compared to 2016. Such a rapid fall might be connected to the overall reduction in the number of arrivals to the EU due to stricter border controls [10]. This has partly been influenced by the closure of the Western Balkans route [11] and the EU–Turkey Statement in 2016 [12], which made the irregular flow of people towards central and northern Europe more difficult and forced migrants to use different routes across the Mediterranean [13].

Figure 6: Asylum applications by state of procedure, EU-27, 2008-2019 (number per million inhabitants)
Source: Eurostat (sdg_10_60)


Significant differences between the level of social inclusion of non-EU citizens and those of home-country nationals persist

The social integration of migrants is monitored here by comparing the situation of non-EU citizens with citizens of EU Member States that reside in their home country – in the following referred to as ‘home country nationals’ – in the areas of poverty, education and the labour market. In all these areas, people from outside the EU face much harsher conditions than EU nationals. However, the differences between these two groups have developed quite differently over time across the different areas.

In relation to poverty and employment, the gap between home country nationals and non-EU citizens has been widening over the past few years. In 2018, nearly 40 % of non-EU citizens were at risk of income poverty after social transfers, compared with only 15.3 % of home country nationals. Poverty rates have remained quite stable for both groups since 2013.

The short-term trend in employment has been more favourable, with rising employment rates for both groups. Nevertheless, the employment growth for home country nationals was a bit stronger than for people from outside, resulting in a widening of the employment gap from 13.0 percentage points in 2014 to 13.8 percentage points in 2019. 73.8 % of home country nationals were employed in 2019, compared with only 60.0 % of non-EU citizens.

In contrast to income poverty and employment, a narrowing of the gap between home country nationals and non-EU citizens since 2014 has been visible in the area of education. While the shares of early leavers from education and training and of young people not engaged in employment nor in education and training (NEET) have fallen for both groups, the improvement has been more pronounced for non-EU citizens. Despite this, the gap between the two groups for both indicators remains significant, with the NEET share of non-EU citizens amounting to 24.2 % in 2019. Meanwhile, the corresponding share for home country nationals was only 11.8 %. For early school leavers, the gap has narrowed by 0.4 percentage points since 2014, but in 2019, 27.0 % of non-EU citizens were still leaving education and training early, compared with 8.9 % of young home country nationals. Because early school leaving and unemployment both have an impact on people’s future job opportunities and their lives in general, further efforts are needed to fully integrate young migrants into European societies.

Context

It is widely agreed that economic prosperity alone will not achieve social progress. Research suggests that high inequality levels risk leaving much human potential unrealised, damage social cohesion, hinder economic activity and undermine democratic participation, to name just a few examples. Although economists believe that some income inequality is necessary for the effective functioning of a market economy, as it allows for incentives that support investment and growth, an ever-widening gap between the rich and the poor is a matter of concern. Inequalities between countries can be reduced by encouraging development assistance and foreign direct investment to the regions with the greatest need. Because rising income inequality within countries can hamper economic growth and social cohesion, the EU seeks to address this by supporting Member States in their efforts to reform their tax and benefit systems, provide universal access to quality education, health and other key services, as well as promote the uptake of income support, active labour market inclusion and integrated social services for those in need. Moreover, the EU promotes the social inclusion of migrants.

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More detailed information on EU SDG indicators for monitoring of progress towards the UN Sustainable Development Goals (SDGs), such as indicator relevance, definitions, methodological notes, background and potential linkages, can be found in the introduction of the publication ’Sustainable development in the European Union — Monitoring report - 2020 edition’.

Notes

  1. OECD (2017), Understanding the socio-economic divide in Europe. Background report.
  2. Darvas, Z. and Wolff, B. (2016), An Anatomy of Inclusive Growth in Europe, pp.14–15.
  3. European Commission (2019), Going climate-neutral by 2050: A strategic long-term vision for a prosperous, modern, competitive and climate-neutral EU economy, p. 18.
  4. European Commission (2019), Employment and Social Developments in Europe, Annual Review 2019.
  5. European Commission (2019), Employment and Social Developments in Europe, Annual Review 2019, p. 46.
  6. European Commission (2008), Poverty and Social Exclusion in Rural Areas, Final Study Report.
  7. Consolidated version of the Treaty on European Union and the Treaty on the Functioning of the European Union. 2012/C 326/01.
  8. European Commission (2018), Employment and Social Developments in Europe, Annual Review 2018, p. 45.
  9. OECD and European Union (2015), Indicators of Immigrant Integration 2015: SettlIng In, OECD Publishing, Paris.
  10. European Commission (2018), Migration: Number of asylum applications in the EU down by 43% in 2017.
  11. The Balkan route has been the main entry point for migrants who entered the EU through Greece and tried to make their way to western Europe via North Macedonia, Serbia into Hungary and Croatia. The route became a popular passageway into the EU in 2012 when Schengen visa restrictions were relaxed for five Balkan countries: Albania, Bosnia and Herzegovina, Montenegro, Serbia and Former Yugoslav Republic of Macedonia.
  12. European Council and Council of the European Union (2016), EU–Turkey statement, 18 March 2016.
  13. UNHCR (2017), Bureau for Europe, Desperate Journeys: Refugees and migrants entering and crossing Europe via the Mediterranean and Western Balkans routes, pp.1–2.