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3 March 2016

The middle class is shrinking, warns the ILO

Over the past ten years the middle class has shrunk in most European countries, worries the International Labour Organisation (ILO) in a report presented on 29 February. ‘The financial and economic crisis has severely affected middle-income groups’, the authors of the report find.

The ILO report finds a contraction of middle incomes (60 to 200 per cent of the median wage) in almost all EU countries. Belgium, France, the Netherlands and Sweden are the only countries that have managed to maintain a stable middle class in recent years. All these countries are equipped with resilient industrial relations, the report underlines. The ILO cites the example of Belgium, which has an automatic wage indexation system that takes into account the development of the cost of living, which ‘seems to have contributed to limit inequalities’. This is somewhat ironic given the fact that the European Commission, which participated in the production of the ILO report, has constantly criticised the Belgian indexation system.

On the other hand, inequalities between the social classes have widened considerably in countries in which social dialogue has been undermined, observes the ILO, which singles out Greece, Spain and Ireland.

‘A weaker middle class leads to lower aggregate demand, puts a break on long-term growth and may cause social and political instability’, comments Daniel Vaughan-Whitehead.

The editor of the report is particularly worried about the situation of young people: ‘The very high youth unemployment rates could result in a lower probability of being part of the middle class, and create an intergenerational gap’.

For more information, see:

ILO: Trends in the world of work: What effects on inequalities and middle-income groups? (29 February 2016) Abstract - Full report

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