Cumulative European Union (EU) enlargements to include relatively less developed countries such as Bulgaria and Romania, along with the possibility of future EU status being granted to Turkey and Albania (EC, 2011), raises further questions about inequality in the European Union. The global recession has bought the issue of labour market models and resulting inequities back into the forefront political discourse, as government cutbacks necessitate the reappraisal of welfare states and labour market policy. This essay will analyse both differing labour market models and the EU labour market as a whole to explain why EU countries have heterogeneous inequities. Overall, within countries, differing interplay of welfare states, varieties of capitalism and employment structures has a profound effect on levels of inequality within labour markets; particularly post EU-crisis when rapid change exacerbated many inequalities. Additionally, the macro EU labour market would appear to create inequality, particularly because of the free movement of labour. It seems despite having a labour market branded as homogenous (Siničáková, 2011), Europe’s interacting varieties of capitalism and employment legislation have created a heterogeneous continent; with equally diverse inequalities.
Gosta Esping-Andersen’s 1990 book The Three Worlds of Welfare Capitalism remains a convenient starting point for examining the capacity different labour models have to create inequality. Despite criticism for being out-dated and of limited relevance given the homogenous nature of Andersen’s typologies, their intuitive coherence means they go some way in explaining patterns of inequality in the EU (Goodin, 1999).
The liberal model of welfare capitalism puts ma...
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I did not want to have a biased view on the subject. After watching Inequality for All, I returned to my dorm in search of reasonable opposition to Professor Reich’s data and claims. Most comments agreed this documentary is truthful and well done. While other comments stated Reich knew nothing about the economy and it is all just rubbish, these comments had no events or reason to back them up. Lastly, rare.us uniquely takes some of the key points in Reich’s argument and combats them one-by-one.
Capitalism, as a system is bound to increase economic disparity. Bill Gates argues that this system would make huge progress in terms of reducing the divide between the rich and the poor (1). However, capitalism would cause disparity not only within a country but also between different countries. A free market would ensure an increase in inequality because the wages of the working class never increase proportionate to the economic growth. This happens because of “inflation, rapid economic growth, the decline in the power of unions and their influence as well as the exchange rate of the dollar” (Thompson). The owners of companies always get the benefits whereas the labor receives very little for the work it has put into the products (Hanks). In terms of disparity between countries, capitalism, while proposing free trade, emphasizes the need for specialization. This specialization increases the divide between the first world and third world. The third world consists of countries which specialize in the primary industry whereas the first world concentrates on the secondary industry. The seco...
Belsie, Laurent. “The Causes of Rising Income Inequality.”.N.p., 5 Mar. 2009. Web. 30 Apr. 2014
In the United States there are four social classes : the upper class, the middle class, the working class, and the lower class. Of these four classes the most inequality exists between the upper class and the lower class. This inequality can be seen in the incomes that the two classes earn. During the period 1979 through the present , the growth in income has disproportionately grown.The bottom sixty percent of the US population actually saw their real income decrease in 1990 dollars. The next 20% saw medium gains. The top twenty percent saw their income increase 18%. The wealthiest one percent saw their incomes rise drastically over 80%. As reported in the 1997 Center on Budget's analysis , the wealthiest one percent of Americans ( 2.6 million people) received as much after-tax income in 1994 as the bottom 35 percent of the population combined (88 million people). But in 1977 the bottom 35 percent had about twice as much after tax income as the top one percent. These statistics further show the disproportional income growth among the social classes. The gr...
“A Guide to Statistics on Historical Trends in Income Inequality.” cbpp.org. Center on Budget and Policy Priorities, 2013. Web. 06 April. 2014. .
It can’t be seen at from just one single angle, trying to find one single indicator. This gets clearer once we look at the other side of the coin i.e. the definition of social inclusion that was given by the EU Employment and Social Affairs Directorate, “The development of capacity and opportunity to play a full role, not only in economic terms, but also in social, psychological and political terms.” Practically speaking, if the idea of who qualifies as eligible to be called socially included, was based on only one determining factor, say, income, then, we would never have understood the plight of a person who might earn above that set standard of income, but does not have a say in who his/her country would be led by, ergo, a person who’s not poor yet, deprived of something essential. How can we even imagine living in a world framed by policies that ignore things as important as
Sutter, John. “What is income inequality, anyway?” CNN. 29 Oct. 2013. Web. 13 Feb. 2014.
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Due to the rapid process of globalization, the issue of whether socio-economic institutions and policies are converging or diverging across different nations has become controversial. Various literatures on comparative institutional studies has been developed, in which the Varieties of Capitalism approach by Hall and Soskice (2001) is one of the most significant concepts that is being widely discussed. According to Hall and Thelen (2005), the ‘varieties of capitalism’ is a firm-centered approach where firm is placed as a key actor and is being considered relational. It emphasizes the concept of institutional complementarities, which ‘…one set of institutions is complementary to another when its presence raises the returns available from the other’ (Hall and Gingerich, 2004, p.6). Also, the development of relationships between firms and other five domains – industrial relations, vocational training and education, corporate governance, inter-firm relations as well as employees, is essential to ensure coordination to maintain competencies (Hall and Soskice, 2001). According to Knell and Srholec (2005), the varieties of capitalism literature has mainly distinguished and identified two types of coordination - Liberal Market Economies (LMEs) and Coordinated Market Economies (CMEs), in which competitive markets are dominant in LMES while CMEs are mainly based on strategic interaction.
In its essence, neo-liberalism advocates free trade, private enterprise, the free flow of capital across borders and, importantly, restrictions on the power of trade unions. These restrictions are important to study and discuss because the world today is no longer regulated by the orthodox laws of economics where supply equals demand (more or less). Instead, we witness radical inequalities and volatility in market conditions. Unemployment remains frighteningly high in many parts of Europe while many workers in parts of Asia and Africa suffer exploitation and work punishingly long hours in extremely poor conditions for a pittance.
First, I must state that my research focuses primarly on developed countries in North America and Europe. The hypothesis for the thesis divides those countries into two cateogories based on the level of labor protections their welfare states have. The first cateogory is countries with strong worker protections. These are countries that according Lindvall and Rueda are most exposed to the effects of dualization and have an insider/outsider dilemma. Following this research I split the population into two groups insiders and outsiders. Insiders are people in work with strong labor protections and outsiders either have no job (and are looking for work) or a job with weak labor protections (part-time job). Next, I split these groups into two more cateogories; workers who receive high net social welfare benefits and workers who receive low social welfare benefits.
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Low wages and unstable jobs largely dominate in certain categories: cleaning services, catering, domestic work or care for the elderly. And the fact that these sectors often employ migrants in the most unacceptable conditions, without any legal guarantee and even without a contract, not at all accidental. The process of crisis that weakens the foundations of capitalist development is accompanied by a steady worsening of exclusion and social disintegration. The miserable world of modern services is instead a lesser way to make a living, which lives only because the number of workers profitable (in terms of value) decreases massively, and that, therefore, far from leading to a new model of capitalist accumulation , functions include providing a decoy to those who see their living standards falling into poverty.
Shawki, Ahmed, Paul D’Amato (2000), “Briefing: The Shape of World Capitalism,” International Socialist Review, [http://www.isreview.org/issues/11/world_capitalism.shtml], accessed 19 May 2012.