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"In the 2000s, global inequality fell for the first time since the Industrial Revolution, driven by a decline in the dispersion of average incomes across countries. Between 1988 and 2008, a period of rapidly increasing global integration, income growth was largest for the global top 1 percent and for country-deciles in Asia, often in the upper halves of the national distributions, while the poorer deciles in rich countries lagged behind. Although within-country inequality increased in population-weighted terms, for the average developing country the rise in inequality slowed down in the second half of the 2000s. However, like any analysis based on household surveys, these results could miss important increases in inequality if they are concentrated at the top. These data constraints remain especially serious in developing countries where only very limited information on the top tail exists, especially regarding capital incomes."

Following the French and Dutch rejection of the draft constitutional Treaty, many questions have arisen about the European Union's political model, its social model, its geographical borders and limits, its founding principles and its identity. Is Europe in deep crisis, or is crisis its usual way of operating? Does enlargement consign the project of the founding fathers to history, or does it force today's political leaders to go back to basics? There is no lack of questions and controversies. In a sense, this proves that the EU has now gone beyond technical issues and is becoming a fundamentally political entity. Too soon or too late, some will say, but the debate is now underway.

The contributors to this edition of Social Developments in the European Union examine the European social model, from both the inside and the outside, the governance of the euro zone, the political priorities outlined in the financial perspectives for 2007-2013, and recent and forthcoming enlargements. They also highlight the important role of political, economic and social stakeholders in debate around the "better legislation" initiative, the Lisbon strategy, European social dialogue and the issue of pensions. The forum for debate plainly acquired a strong European dimension in 2005. Perhaps the way out of the present crisis might therefore be to devise a coherent new project and promote the emergence of political players who are prepared to implement it.

"La vague inégalitaire a-t-elle atteint la Belgique ? Depuis quelques années en effet, un malaise est perceptible au sein de la société civile quant à la problématique de la distribution et de la redistribution des revenus et à la hausse des inégalités. Les riches deviendraient toujours plus riches, les pauvres seraient de plus en plus nombreux et le sort de la classe moyenne ne s'améliorerait plus, voire se dégraderait significativement. Un malaise s'exprime également au sujet de la répartition entre revenus du travail et revenus du capital : c'est ici une économie dirigée par les actionnaires, qui tirent la couverture à leur profit, qui est dénoncée, ainsi que la globalisation des économies. Qu'en est-il exactement en Belgique ?

Pour répondre à cette question, C. Valenduc exploite les statistiques relatives aux vingt dernières années. D'une part, il examine comment le revenu global est réparti entre le travail et le capital, et comment le champ global de la redistribution évolue par rapport aux revenus primaires. D'autre part, il analyse la distribution des revenus entre les ménages.

L'étude montre que la situation est nuancée. La vague inégalitaire n'a pas submergé les Belges, mais « elle leur a mouillé les pieds, et même un peu les jambes ». Certains constats vont dans le sens d'un accroissement des inégalités et d'une distribution à l'avantage du capital. Ainsi, les salaires décrochent de l'évolution de la productivité et les salaires réels nets progressent peu. La part du revenu national qui revient aux particuliers est en baisse, à l'avantage de celle qui échoit aux entreprises et à l'État. Mais l'effet redistributif de l'impôt contient la hausse de l'inégalité des revenus. Le champ de la redistribution ne s'est pas rétréci et il a contribué, par les transferts, à soutenir la croissance du revenu disponible.

Par ailleurs, il apparaît que la Belgique résiste mieux que d'autres pays à la montée des inégalités, notamment au niveau des revenus primaires et de la répartition du patrimoine. Cela est dû à divers éléments institutionnels, tels que le processus de négociation des salaires, l'arbitrage avec l'emploi, le taux de syndicalisation et le salaire minimum."

"There is a widespread belief that the COVID-19 pandemic has increased global income inequality, reducing per capita incomes by more in poor countries than in rich. This supposition is reasonable but false. Rich countries have experienced more deaths per head than have poor countries; their better health systems, higher incomes, more capable governments and better preparedness notwithstanding. The US did worse than some rich countries, but better than several others. Countries with more deaths saw larger declines in income. There was thus not only no trade-off between lives and income; fewer deaths meant more income. As a result, per capita incomes fell by more in higher-income countries. Country by country, international income inequality decreased. When countries are weighted by population, international income inequality increased, not because the poorest countries diverged from the richest countries, but because China—no longer a poor country—had few deaths and positive economic growth, pulling it away from poor countries. That these findings are a result of the pandemic is supported by comparing global inequality using IMF forecasts in October 2019 and October 2020."

"This paper looks at the social policy responses to the Great Recession and the COVID-19 crisis and assesses their impact on preserving living standards in Ireland. The former crisis was in an environment pressured to balance budgets with a greater focus on cost reduction. In contrast, during the COVID-19 crisis, there was a greater focus on mitigating the impact on household incomes largely funded by debt. Another innovation in the current crisis were the joint public and private responses through social partnership. Using the microsimulation methodology, we find a stronger social policy response during the COVID-19 crisis than during the financial crisis. However, as the impact of the COVID-19 crisis was deeper and quicker, family support was not as strong as there were more individuals out of work. The contribution of the private support based on social partnership, however, was stronger. As a result, those on lower incomes ended up with higher disposable incomes at the onset of the COVID-19 crisis, albeit with policy learning, this fell over the first wave of the pandemic. We conclude by reporting a positive impact on trust in public institutions during the COVID-19 crisis as opposed to a decline during the financial crisis."

"GDP contractions are typically associated with within-country income inequality increases. While official income inequality data for 2020 will not be available for about two years, the already available employment data for 2020 shows that the difference between highly-educated and low-educated people in terms of job losses is correlated with the economic shock from the COVID-19 pandemic, suggesting that the depth of the economic recession is related to the increase in within-country income inequality in 2020. Scenarios based on historical patterns of recessions and within-country income inequality increases suggest relatively small increases in global income inequality in 2020.

Factors mitigating global inequality increases in 2020 include larger GDP per-capita declines in richer advanced countries than in poorer emerging and developing countries, and the positive GDP growth of China, which suggests that within-country inequality in the world's most populous country might have not changed much in 2020. In contrast, it is quite likely there was a significant increase in European Union income inequality in 2020, partly reversing the decline during the previous decades."

"It has almost become a cliché to say that the Covid-19 pandemic has exacerbated pre-existing inequalities while also generating new ones. However, the following pages of this year's Benchmarking Working Europe clearly reveal that, far from being a platitude, the nexus between the pandemic and rising inequalities is both increasingly measurable and alarming. But they also stress that inequality is not just a one-off historical incident linked to a particular crisis. It is in fact the product of an economic model that, for the past three decades, has progressively redistributed less and less wealth to the bottom percentiles of society, while accumulating more and more at the top. In other words, it is a structural problem. Given the corrosive impact that inequalities are having on the social and economic, let alone political and democratic, fabric of our societies, the policy responses to the problem of inequality must be equally structural in character."

"The central questions and main contextual background explored by this year's issue of Benchmarking are, at their core, fairly straightforward. Europe is at a crossroads, painfully navigating four transitions at once: a (perhaps less than obvious) economic policy transition best exemplified by the debates surrounding the EU economic governance framework (COM(2022) 583 final); a geopolitical transition, increasingly shaped by the ‘open strategic autonomy' debate (Akgüç 2021) and, of course, by the Russian war of aggression on Ukraine; and the two more readily acknowledged green and digital transitions. It is, however, becoming increasingly clear, as explored in greater detail in the following chapters, that these four transitions imply important trade-offs and have significant ramifications for the social dimension of the European project and for the livelihoods of European workers. These consequences are currently being ignored by the principal institutional actors that are shaping them and that, at times, have conflicting priorities.

The current inability on the part of governments and policy-makers, at a national and supranational level, to resolve the tensions inherent to these transitions is a major factor in determining what the following pages of this issue refer to as a ‘polycrisis'. We understand the current conjuncture as a ‘polycrisis' due to the presence of a series of multiple, separate crises happening simultaneously (e.g. a climate crisis, a cost-of-living crisis, a geopolitical crisis, etc.), due to the way in which these separate crises interact with each other (for instance the energy crisis and the climate crisis), and due to the extent to which they thus amplify each other's effects, in particular social and economic effects (the extent to which strained supply chains and externally driven inflationary pressures tend to magnify the shortcomings of current fiscal policies, for instance, as noted in the opening chapter). There is also a growing perception that resolving any of these crises in isolation may be a particularly arduous task and that cumulative responses must be identified.

This polycrisis is intimately linked to the inability of the ruling class to engage with what we identify here as the missing transition: the social transition. This issue of Benchmarking Working Europe engages critically with these four transitions and their effects and posits that only a transformative and ambitious social transition can break the current cycle of crisis after crisis and instead institutionalise what the issue refers to as ‘sustainable resilience'.

The four transitions – and the missing one
We are arguably witnessing four major discernible and disruptive transition processes that are shaking the kaleidoscope of the European project as it is currently still enshrined in the (fragile) constitutional consensus embodied by the Lisbon Treaty. The rather more obvious (but no less challenging) processes are the green and technological transitions. Yet, it is arguable that, most visibly since the suspension of parts of the Stability and Growth Pact, we have also been experiencing an economic policy (including a monetary policy) transition and – in connection with the supply chain shortages caused by Covid‑19 and its aftermath, and more markedly since the Russian invasion of Ukraine – a geopolitical transition linked to the developing concept of ‘open strategic autonomy'"

"Despite growing attention to income inequality in debates about European integration, our understanding of its effect on European Union support remains limited. Using European Social Survey data from 2002 to 2020, we analyse how income inequality and pro-redistribution attitudes shape diffuse and specific forms of support for the European Union. We find no direct effect of country-level income inequality, while individual support for redistribution has a negative effect on both. In line with benchmarking theory, inequality emerges as a contextual moderator: in unequal national settings, egalitarian citizens are comparatively more supportive of further integration than in more equal countries. This effect persists when we control for income position, suggesting an ideological rather than utilitarian basis for benchmarking European Union attitudes. We discuss implications in light of debates about a social Europe."