Structural solutions for structural inequalities—a trade union perspective

Responses to the pandemic have upended the idea that ‘there is no alternative’ to macroeconomic policies engendering widening inequality.

As the European Trade Union Confederation and the European Trade Union Institute come together to launch the 21st issue of their annual publication, Benchmarking Working Europe—with the evocative title ‘Unequal Europe’—it is opportune to reflect on the nature of inequality and on what the European Union in particular should do to tackle it.

The chapters of this year’s report offer a powerful reminder that inequality is not just a one-off historical incident, linked to a particular crisis. There is little doubt that the pandemic has generated new forms of inequality while exacerbating others or that Covid-19 has thrived on the vulnerabilities affecting our societies. But it is also clear, and evidenced, that inequality is fundamentally the product of an economic model that, for the past three decades, has progressively redistributed less and less income and wealth to the bottom percentiles of society while sequestering more and more at the top. In other words, inequality is a structural problem. And structural problems require structural solutions.

Policy responses

In the past two years we have seen novel policy responses to the challenges brought by the pandemic, markedly departing from the neoclassical economic formulae which poisoned the well of European integration during the austerity decade. These have included the employment-support programme SURE and the dozens of job-retention and income-support schemes which have proliferated in the EU since spring 2020. The fiscal constraints of the Stability and Growth Pact have been temporarily suspended and some rules on state aid and competition law relaxed. And of course there has been an unprecedented injection of liquidity in the real economy under Next Generation EU and its national counterparts.

Our work suggests that, without this change of direction, the social and economic impact of the pandemic would have been catastrophic and the European project could have been fatally derailed. These national and European policy responses to the Covid-19 crisis should however no longer be considered temporary and contingent—with an expiry date already pencilled in the 2023 calendar—but reinterpreted as structural answers to longstanding deficiencies of the neoliberal governance model.

Paradoxically, unequal societies are less capable of managing change—including the change needed to address the deepest, often existential, challenges that confront us. While Covid-19 has disproportionately hit the most vulnerable, vaccine hesitancy—not to mention the availability of vaccines on a global scale—is also deeply correlated with social and economic inequalities, hampering efforts to immunise as many as possible. Similarly, our research shows that those least responsible for climate change (in Europe and beyond) are, and will continue to be, those most affected by it.

Decisive reorientation

Our work points also to another paradox: the growing social and economic disadvantage of our times is likely to retard a decisive reorientation of our system of production and consumption towards a carbon-neutral future. To simplify a much more sophisticated message, since climate-mitigation policies affect energy and food prices, they are likely to slow down progress in access to energy and disproportionately affect the poorest, who spend a higher share of income on these goods—generating resistance and discontent.

A decade ago, it was commonplace to justify austerity policies by suggesting—as the former British prime minister Margaret Thatcher put it—that ‘there is no alternative’. But the redistribution-oriented and counter-cyclical responses to the pandemic have clearly shown that an alternative does exist and can be implemented successfully, when there is widespread political will to do so.

More than that, as pointed out in the foreword to our report and the guest editorial written by Prof Kate Pickett, there is a large, growing and coherent body of ideas, theories and policy proposals that anticipate a more sustainable, resilient and equitable future for all. A future that will require policy-makers to make some important—and sometimes challenging—choices today, to ensure the wellbeing of our societies tomorrow.

A new age of prosperity, shaped by a fair and sustainable distribution of economic and natural resources, decent incomes and a just share for all of the fruits of progress is, at long last, within the grasp of our generation.