From the TUC

Economic inequality and social justice – lessons from Northern Europe

21 May 2012, by in International

Judy McKnight, former General Secretary of NAPO and Chair of the TUC Women’s Committee, is now a TUC nominee on the European Union’s Economic and Social Committee (EESC). In that capacity, she took part in the 2012 annual meeting of the European Economic Area (EEA) Consultative Committee, held in Iceland earlier this month. The Committee brings together representatives from civil society in both the EU and the EEA countries – Iceland, Norway and Liechtenstein. Here’s a summary of her speech.

There is a striking difference between the Nordic countries and the rest of Europe, including the UK, in terms of economic inequality and social justice, and interestingly, levels of growth. Nordic countries not only top OECD indices on economic inequality and social justice but are also recovering from the economic crisis quicker than those countries such as the UK. Since the mid 1970s we have had a greater increase in income inequality among working age people than any other wealthy country, we trail the Nordic countries on social justice and, having adopted austerity measures, are not finding a quick path to growth. And all these issues are connected.

Clive Cowdrey from the Resolution Foundation, interviewed in the Guardian in  February 2011, noted that between 2003 and 2011, the income of the very richest in the UK had shot up such that the top 1% had swallowed 60% of economic growth. He also pointed out that the average pay in Britain would be no higher in 2015  than it was in 2003, after taking account of inflation.

In other words the issue is not just about the disparity between the rich and the poor, it’s about the growing disparity between the super-rich and everyone else. It’s also about the fact that, according to
research in the Financial Times in March, although the majority of generations have for a century always been better off than previous generations, that trend stopped in the UK in 2000.

There is increasing evidence that the Thatcherite/New Labour theory that wealth creation generates growth and therefore benefits everyone simply doesn’t work. If anything, it could be a contributory factor in the economic crisis. And as Richard Wilkinson and Kate Pickett argued in their 2009 book The Spirit Level, economically equal societies have happier, healthier and more successful populations.

So, if there is increasing evidence that an increase in inequality is a major contributory factor behind the economic crisis, why have the UK and much of the rest of Europe adopted austerity measures that undermine social justice and make inequality greater than ever?

As Stewart Lansley said in his 2011 book The Cost of Inequality: Three Decades of the Super-Rich and the Economy:

“The lesson – for the right as well as the left – is that capitalism that shares its output proportionately between profits and wages, and fairly amongst all citizens, is not just likely to be politically more stable, it will also deliver a more productive economy, faster growth and less turbulence.”

2 Responses to Economic inequality and social justice – lessons from Northern Europe

  1. John
    May 22nd 2012, 4:22 am

    I wish that this excellent report Judy was nailed to the mast of Osbourn’s & Cameron’s sinking HMS Conservative ship!

  2. MH
    May 22nd 2012, 10:51 am

    Simples!

    Just got to make the decision makers with their vested interests believe it. Move away from neo-Liberalism, it is yesterday’s disproven ideology and move towards social democracy before it is too late and extremist parties starting gaining the votes from disaffected citizens.

    Oh, it is already happening!!!

TUC