SDG 10 - Reduced inequalities

Reduce inequality within and among countries

Data extracted in August 2018

Planned article update: September 2019

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 part of a set of statistical articles, which are based on the Eurostat publication ’Sustainable development in the European Union — Monitoring report - 2018 edition’. This report is the second 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.

Goal 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 increased. Social inclusion in the EU has also been challenged by an unprecedented surge of migration into the EU over the past few years.

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]. Inequality within EU Member States seems to be gradually rising. Although many factors have played a role, technological innovation and financial globalisation, favouring people with specific skills and those with accumulated wealth, have been important driving forces behind rising inequality within countries [2].

The gap between the rich and the poor in the EU is widening slightly

Figure 2: Inequality of income distribution, EU-27 and EU-28, 2005–2016 (income quintile share ratio)
Source: Eurostat (sdg_10_41)


Figure 3: Income share of the bottom 40 % of the population, EU-27 and EU-28, 2005-2016 (% of income)
Source: Eurostat (sdg_10_50)

One of the objectives of the social policies in the EU is to reduce inequality by providing equal opportunities for all [3]. However, inequality of opportunities and inequality of outcomes (such as income inequality) are closely interdependent: equal outcomes cannot be achieved without equal opportunities, but equal opportunities cannot be achieved when households begin from greatly unequal starting points [4]. Analysing the inequality of 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 disposable income to that received by the 20 % of the population with the lowest disposable income. The higher this ratio, the bigger the income inequality. In the EU, this ratio has increased by 0.2 points since 2005 and has stagnated at a ratio of 5.2 over the last three years. This means that the richest 20 % of households have income that is about five times as much as the poorest 20 %.

Widening inequality can also be observed when looking at the income share of the bottom 40 % of the population in the total equivalised disposable income. Their income share has been shrinking over time, from 21.5 % in 2005 to 20.9 % in 2016.

The deterioration in the income share of the bottom 40 % of the income distribution since 2005 confirms the trend of widening income inequalities despite the economic recovery. One reason for this might be the disproportionate effect of labour market improvements during the recovery, which have generally favoured high-income households [5]. Despite recent reductions in unemployment (see the article on SDG 8 ‘Decent work and economic growth’), the levels of long-term unemployment, joblessness and inactivity remain high among certain population groups (for example, low-skilled people, people with disabilities and migrants). In addition, high disparities among workers in terms of job quality, work contracts or job security continue to weigh heavily on low-income households.

Between 2010 and 2014, labour incomes almost recovered to their pre-crisis levels on average, but not among low-income earners. This is likely to have contributed to declines in the income share of the bottom 40 % of earners. Households at the lower end of the income distribution are also more affected by financial distress and are therefore more vulnerable to income shocks. According to the 2017 Annual Review of Employment and Social Developments in Europe [6], 10 % of adults in the low-income quintile were in debt and a further 15 % drew on savings to cover current expenditure, compared to 5 % and 10 % for the total population, respectively [7].

The poor become poorer in the EU and the number of the poor is increasing

Figure 4: Relative median at-risk-of-poverty gap, EU-27 and EU-28, 2005–2016 (% distance to poverty threshold)
Source: Eurostat (sdg_10_30)

Another way to measure inequality of outcomes within countries is by looking at income poverty as 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 2016, 86.9 million people — 17.3 % of the EU population — were at risk of poverty after social transfers. People are considered to be at risk of income poverty when their equalised disposable income (after social transfers) is below the at-risk-of-poverty threshold, which is set at 60% of the national median equalised disposable income after social transfers.

The number of people living in income poverty in the EU has risen substantially since 2005 (+ 8.3 %), with the largest increases occurring in recent years. Furthermore, the average distance of those at risk of poverty from the poverty threshold has increased: in 2016, this gap amounted to 25.0 % of the poverty threshold in the EU. This represents an increase of 1.7 percentage points since 2005 [8]. The growth of this gap has accelerated since 2011. Vulnerable groups of the population, including children, people with disabilities, migrants and Roma, are more likely to be at risk of poverty and social exclusion [9].

Inequalities between countries

We live in an interconnected world, where problems and challenges — be they poverty, climate change, migration or economic crises — are rarely confined to one country or region. Therefore, combating inequalities between countries and world regions 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 also one of the objectives of the EU, as mentioned in the Treaty on European Union (article 3.3) [10].

Economic disparities between EU countries have reduced over time

Figure 5: Purchasing power adjusted GDP per capita, EU-28, 2000–2017 (coefficient of variation of volume indices of expenditure per capita, in %)
Source: Eurostat (sdg_10_10)


Figure 6: Adjusted gross disposable income of households per capita, EU, 2000–2016 (coefficient of variation, in %)
Source: Eurostat (sdg_10_20)

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. Two indicators are used to measure this convergence and they both show that inequalities between the EU countries have decreased over the past 10 years.

The coefficient of variation in GDP per capita in purchasing power standard (PPS) — calculated as the ratio of the standard deviation to the mean — shows that economic disparities in GDP per capita between Member States narrowed slightly between 2002 and 2017, reaching 40.8 % in 2017. According to the 2016 Annual Review of Employment and Social Developments in Europe [11], this 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 to 2009.

While GDP per capita is used to measure the economic performance of a country, adjusted gross household disposable income provides an indication of the average material well-being of people. Gross household disposable income reflects the purchasing power of households and their ability to invest in goods and services or save for the future, by accounting for taxes, social contributions and in-kind social benefits.

The two indicators differ, as GDP per capita measures income that might not necessarily accrue to households and does not capture household income received from investments abroad, for example, in the form of dividends and interest receipts. In contrast to the coefficient of variation in GDP per capita, recent developments in gross household disposable income across the EU do not point to a short-term stagnation, but rather a further improvement, reaching a coefficient of variation of 25.8 % in 2016, which is 4.6 percentage points less than in 2011, though the drivers of this change remain unclear.

Clear north-south and west-east divides between EU countries, despite overall reduction in economic disparities

A clear north-south and west-east divide is evident when looking at the geographical distribution of GDP per capita and income of households in the EU in 2016. 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.

This divergent pattern is broadly reflected in other fields of economic performance such as employment, R&D expenditure and resource productivity (see articles on SDG 8 ‘Decent work and economic growth’, SDG 9 ‘Industry, innovation and infrastructure’ and SDG 12 ‘Responsible consumption and production’) as well as in social dynamics in terms of levels of poverty and social exclusion (see article SDG 1 ‘No poverty’).

The drivers behind such west-east and north-south divergences are difficult to track. For the west-east divide, the long-lasting effects of communist regimes and the following transition to capitalism together with later accession to the EU might be the reasons for the weaker economic performance in some countries [12].

The EU’s different forms of assistance to developing countries have risen over the recent decade

The EU’s values of social and economic justice and equality apply not just to its own territories but also to global development in general. The assistance given by the EU and its Member States to developing countries is an expression of solidarity with their efforts to eradicate poverty and vulnerability, improve their populations’ well-being and achieve sustainable development.

The EU’s commitment to reducing inequalities between countries goes beyond official development assistance (ODA). In line with the new European Consensus on Development, the EU takes a comprehensive approach to development cooperation, drawing on the framework agreed through the Addis Ababa Action Agenda, combining aid with other financial and non-financial resources, with sound policies and a strengthened approach to Policy Coherence for Development. For instance, trade openness is another means of helping countries to achieve lasting economic development and independence from ODA. Through trade cooperation, the EU aims to help developing and least-developed countries join the global economy and reap the benefits it provides for economic specialisation, growth and job creation.

The EU’s impact on reducing inequalities between countries can be measured by two indicators: EU financing to developing countries and EU imports from developing countries. Over the past decade both the financial help given to developing countries and imports from developing countries has increased significantly. Total EU financing for developing countries, encompassing flows from the public and private sector, has more than doubled since 2001, representing an average annual growth of 6.4 %. However, EU financing fell by 18.7 % in 2016, which led to an annual average decrease of 1.2 % in the short-term period since 2011. For the first time since 2009, official development assistance became the largest source for development financing. Overall, EU financing for developing countries amounted to almost EUR 145 billion in 2016.

EU imports from developing countries also more than doubled between 2002 and 2017, from EUR 359 billion to EUR 957 billion, which is a new highpoint. Growing imports from China have been a decisive factor behind the long-term growth in EU imports. For more information on the different forms of the EU’s assistance to developing countries, see the article on SDG 17 ‘Partnership for the goals’.

Migration and social inclusion

The number of irregular border crossings and asylum applications in the EU remains high

Figure 7: Asylum applications by state of procedure, EU-28, 2008–2017 (number per million inhabitants)
Source: Eurostat (sdg_10_60)

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. People fleeing from the conflicts and war situations, as well as economic migrants, are sometimes forced to violate the migration laws of the EU Member States by overstaying their visas or by crossing borders illegally. In 2017, Member States detected 204 719 illegal border crossings along the EU’s external borders [13]. This represents an 89 % decrease compared to 1.8 million detections at the height of the so-called refugee crisis in 2015 [14]. Despite this, the absolute number of detections in 2017 exceeded any number of detections recorded in recent history between 2008 and 2013. This indicates that pressure on the EU’s external borders remains high.

The urge to seek international protection is one of the main reasons that forces people to cross borders illegally. In 2017, the EU received 654 610 first-time asylum applications (equalling 1 278 applications per million inhabitants), which is almost 50 % less then at the height of the refugee crisis in 2015 but still a 4.3 times increase in comparison to 2008. During 2017, 442 925 people received a positive decision granting protection status at first instance in the EU.

Despite the unprecedented increase in first-time asylum applications in the EU between 2008 and 2017, the figure for 2017 marked a decrease of more than half a million of first-time applicants (45.7 %) in comparison with the year before. Such a rapid decrease might be connected with the overall reduction in the number of arrivals to the EU due to stricter border controls [15]. This has partly been influenced by the closure of the Western Balkans route [16] in early March 2016 and the EU-Turkey Statement of 18 March 2016 [17], which have made the irregular flow of people towards central and northern Europe more difficult and has forced migrants to use different routes across the Mediterranean (the Central Mediterranean route from North Africa to Italy; the Eastern Mediterranean route from Turkey to Greece, Bulgaria and Cyprus; and the Western Mediterranean route from North Africa to Spain) [18].

The largest groups of first-time asylum applicants in Member States in 2017, accounting for more than one-third of all first-time applicants, were Syrians (102 375), Iraqis (47 650) and Afghans (43 800). The distribution of first-time asylum applicants by sex shows that men were overrepresented among those seeking asylum, with about two in three (66.8 %) asylum seekers being male. Many of those men arrive first, hoping to find a safe place to live or work before trying to reunite with their families[19].

In 2017, 442 925 asylum applicants received a positive decision at first instance, entitling them to remain in the EU and receive international protection, up from 57 945 in 2008. Half of them (50.1 %) were granted refugee status under the Geneva Convention [20], which establishes protection for civilians due to a well-founded fear of persecution. More than a third (35.6 %) of those with a positive asylum decision did not meet the criteria for the recognition as refugees under the Geneva Convention, but received subsidiary protection because of a real risk of suffering serious harm if they returned to the country of origin [21]. Finally, 14.2 % of those with positive decisions were granted authorisation to stay for humanitarian reasons [22].

Context

It is widely agreed that economic prosperity alone will not achieve social progress. Economic growth that does not include all parts of society risks leaving behind unrealised human potential, damaging social cohesion, hindering economic activity and undermining democratic participation, to name a few examples. Although economists believe that some inequality is in fact necessary for the effective functioning of a market economy because it provides the incentives needed for 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 drags down economic growth and stalls progress in poverty reduction, health and well-being, the EU seeks to reduce income poverty in the EU Member States by increasing the income of low-income households. Moreover, the EU aims to promote social inclusion by facilitating safe migration and mobility of people.

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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 - 2018 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 Parliament, European Council, European Commission (2017), European Pillar of Social Rights.
  4. United Nations Development Programme (2013), Humanity divided: confronting inequality in developing countries.
  5. OECD (2016), Income inequality remains high in the face of weak recovery, p. 2.
  6. European Commission (2017), Employment and Social Developments in Europe, Annual Review 2017.
  7. European Commission (2017), Employment and Social Developments in Europe, Annual Review 2017, p. 43.
  8. Data refer to the EU-27.
  9. European Commission (2017), Employment and Social Developments in Europe, Annual Review 2017, p.46.
  10. Consolidated version of the Treaty on European Union and the Treaty on the Functioning of the European Union. 2012/C 326/01
  11. European Commission (2016), Employment and Social Developments in Europe, Annual Review 2016, p.46.
  12. Lane, D. (2007), Post-Communist States and the European Union, Journal of Communist Studies and Transition Politics, 23:4, 461-477.
  13. Frontex (2018), Risk analysis for 2018, p. 8.
  14. Frontex (2018), Risk analysis for 2018, p. 8.
  15. European Commission (2018), Migration: Number of asylum applications in the EU down by 43% in 2017.
  16. 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 the former Yugoslav Republic of 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.
  17. European Council and Council of the European Union (2016), EU-Turkey statement, 18 March 2016.
  18. UNHCR (2017), Bureau for Europe, Desperate Journeys: Refugees and migrants entering and crossing Europe via the Mediterranean and Western Balkans routes, p.1–2.
  19. UNHCR (2015), The sea route to Europe: The Mediterranean passage in the age of refugees, p.7.
  20. The 1951 Geneva Convention relating to the status of refugees (as amended by the 1967 New York Protocol) has, for over 60 years, defined who is a refugee, and laid down a common approach towards refugees that has been one of the cornerstones for the development of a common asylum system within the EU. Since 1999, the EU has worked towards creating a common European asylum regime in accordance with the Geneva Convention and other applicable international instruments.
  21. Council Directive 2004/83/EC of 29 April 2004 defines serious harm as the risk of: "(a) death penalty or execution; or (b) torture or inhuman or degrading treatment or punishment of an applicant in the country of origin; or (c) serious and individual threat to a civilian's life or person by reasons of indiscriminate violence in situations of international or internal armed conflict."
  22. These include people who are not eligible for international protection as currently defined in the first-stage legal instruments, but are nonetheless protected against removal under the obligations that are imposed on all Member States by international refugee or human rights instruments or on the basis of principles flowing from such instruments. Examples of such categories include people who are not removable on ill-health grounds and unaccompanied minors.