When inequality rises, economic growth falls

What if the fight against inequality was not only good for greater social justice in Europe, but also good for the economy? This is the stance we share with the Organisation for Economic Cooperation and Development (OECD) that produced a report in December showing that income inequality hurts economic growth. The gap between rich and poor is at its highest level in 30 years in most OECD countries, and rising inequality has reduced potential growth by more that 9 percent in the UK and Finland and 6-7 percent in Italy and Sweden. The report goes on to point out that ’greater equality prior to the crisis helped increase the GDP [gross domestic product] in Spain, France and Ireland’.

Taking this into account, what is the role of the EU in prioritising the fight against inequality?

The OECD suggests that increasing access to public services such as high quality education, training and healthcare are long-term investments that can create greater equality in the long run. Social Platform believes that it is time for the EU to adopt the anti-discrimination directive on access to goods and services to ensure that a person or group’s age, disability, religion or sexual orientation does not prevent them from benefiting from essential services. We have called on the European Commission to ensure that the trade agreement with the US that is currently being negotiated is not detrimental to public services and social and health services; they are essential not only for the enjoyment of our fundamental rights, but also for greater prosperity. We are also fighting for a focus on financing social, health and education infrastructures in the EU’s new investment plan.

For the last two years we have been calling for greater socio-economic justice and tax justice in the EU. Not only would this ensure a high level of social standards across the EU, but it would also be good for the economy. The OECD recognises that tackling inequality through tax and transfer policies does not harm growth – on the contrary.

After the LuxLeaks scandal, it is time to begin high-level discussions on how the EU can assist member states in the fight against inequality for a more just society.

We look forward to working on this issue during the course of 2015, and will be campaigning for EU decision makers to commit to our recommendations on social standards such as an EU-wide minimum income, minimum wage and financing of social services.

Let’s engage!

Pierre Baussand, Director