GINI DP 52: Virtuous Cycles or Vicious Circles? The Need for an EU Agenda on Protection, Social Distribution and Investment

Introduction In the decade leading to the present crisis – despite years of growing employment and increasing average incomes – Europe did not succeed in making any substantial progress in combating relative income poverty, particularly among the working age population. Certainly, Europeans became richer and material deprivation declined. Similarly, the number of Europeans living with an income below the EU-wide poverty line decreased. However, if we take the perspective of relative income poverty defined at the national level the proportion of individuals living with an income lower than 60 per cent of the median income in their country remained invariably at the level of approximately16 per cent of European population. Of course, underneath the surface of a apparent stasis there were divergent national trends. Increases of at-risk-of-poverty were noticeable in the Nordic countries. There were clear and consistent decreases in many of the new Member States, while other countries displayed no significant change. On average, however, on the national escalators of income growth and employment rise the discrepancy between the rich and the poor did not decrease. ...