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Employment and Social Developments in Europe (ESDE) 2024

Chapter 1 - Main economic, labour market an social developments
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Main employment and social developments
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4. Living conditions, poverty, and income developments

4.2. Income inequality

Following a slight decrease in 2021 and 2022, income inequality in the EU remained broadly static in 2023 compared to 2022, despite the challenging context. As a measure of inequality of income distribution, the ratio of the total income received by 20% of the population with the lowest income (bottom quintile) remained broadly stable, at 4.72 in 2023 (2022 incomes), compared to 4.74 in 2022 (2021 incomes). (43) This development was confirmed by Eurostat’s flash estimates of income quintile share ratio for the top and bottom quintiles (S80/S20) nowcasting 2023 income. The broad stability of income inequality during subsequent crises reflects the large-scale support measures put in place by Member States, with EU support, which significantly mitigated negative effects. More generally, income inequality would be much higher without the redistributive effects of transfers (Chart 1.20). (44)

Chart 1.20
Social transfers reduced inequalities

Disposable income quintile share (S80/S20) (left-hand side) and Gini coefficient before and after social transfers (excluding pensions) (right-hand side), 2015-2023, EU

Social transfers reduced inequalities

Note: Year refers to EU Survey on income and Living Conditions (EU-SILC) survey year; income from previous year. Break in time series in 2020 due to major methodological changes (especially in Germany).

Source: Eurostat, EU SILC [ILC_DI11] [ILC_DI12] [ILC_DI12C].

Notes

  • 43.EU-SILC indicators provide insights on the economic wellbeing and other living conditions on EU residents based on data collected during a specific year, denoted as N. This data encompasses both the characteristics of households for that year (N) and the income from the preceding year, N-1. The income for year N-1 is an estimate for income of year N within EU-SILC. To take into account differences in household size and composition and thus enable comparisons of income levels, the concept of equivalised disposable income is used. It is based on the total net (also referred to as disposable) household income divided by the number of 'equivalent adults', using a standard (equivalence) scale.
  • 44.These effects are represented by the difference between the GINI coefficient before and after social transfers.