National wealth increased over the European countries in the 21st century, but the inequality between the wealthiest 1 percent and poorest 50 percent is more noteworthy than it was in the 1800s. Well, what does income inequality mean for the future growth of Europe’s wealth? Today, the top 1 percent income growth has doubled, but due to globalization, it has not for the unlucky 50 percent.

“ This opens the door to political entrepreneurs who try to set ‘the people’ against the ‘ruling class.’”

(Chhor, 2018)

While in Europe, as gross income inequality has diminished over the last two decades, both income inequality and unemployment have remained high in some member states on a country-by-country basis (Wolff, 2016). Income inequality is utilized as an indicator of a country’s national wealth; income inequality in European countries means limited opportunities for citizens. Income inequality results from various problems, such as unemployment, which is particularly high in the southern EU member states (Wolff, 2016). Unemployment is stagnating in the Member State’s economic growth state and greatly discourages young people from entering the labor market and pursuing their career. Unfortunately, unemployment has the most significant impact on children; children who live in a house with unemployed parents tend to have poor results at school. At the moment, the effects on children do not appear to be obvious, but they are of greater importance for life expectancy and future quality of life in Europe.

In addition, income inequality is crucial for society, as it conveys an air of unrest that can influence people to favor the vote of populist political parties over other alternatives (Chhor, 2018). The sole purpose of populist political parties is to exploit the feeling of public dissatisfaction and to exploit their vulnerabilities to achieve a government position in national elections. Populist political parties claim to be the voice of the public that works exceptionally well in times of crisis or events that can drastically affect a Member State, such as Brexit (Wolff, 2016).

Finally, when discussing income inequality, pensions need to be addressed, as they contribute most to redistributing the country’s wealth. Currently, pensions account for almost 50% of the EU inequality fiscal policy (Inchauste, 2018). On the one hand, although pension expenditures in Europe have increased or remain the same, spending on families and education has decreased to achieve better pensions (Wolff, 2016).

What does income inequality mean for the future growth of European prosperity? In sum, it can be said that economies are stagnant due to high unemployment, difficult labor market penetration, and the poor performance of children in school. Populist parties gain greater favor and are influenced by the European public in Europe. Higher pension expenditure, but at the expense of reducing family and education spending. These three points must be taken into account when discussing the obstacles that Europe must overcome to ensure its wealth in the future.

References

Darvas, Z. (2018). This is the state of inequality in Europe. Retrieved from https://www.weforum.org/agenda/2018/05/european-income-inequality-begins-to-fall-once-again
Commission, E. (2019). Publication of the FEAD mid-term evaluation. Retrieved from https://ec.europa.eu/social/main.jsp?langId=en&catId=89&furtherNews=yes&newsId=9331
Inchauste, G., & Karver, J. (2018). Fiscal Redistribution in the European Union. World Bank Group. Retrieved from http://pubdocs.worldbank.org/en/632981520461235859/EU-IG-Report-Fiscal-Redistribution.pdf
Chhor, K. (2018). Income inequality, financial crisis and the rise of Europe’s far right. Retrieved from https://www.france24.com/en/20181116-income-inequality-financial-crisis-economic-uncertainty-rise-far-right-europe-austerity