? ? Inequality and the top 10% in Europe Inequality and the top 10% in Europe Inequality and the top 10% in Europe Inequality and the top 10% in Europe Published by: FEPS Foundation for European Progressive Studies Avenue des Arts, 46 1000 - Brussels T: +32 2 234 69 00 Email: [email protected] Website: www.feps-europe.eu/en/ Twitter @FEPS_Europe TASC 28 Merrion Square North Dublin 2 Ireland Tel: +353 1 616 9050 E-mail: [email protected] Website: www.tasc.ie Twitter: @TASCblog © FEPS, TASC 2020 The present report does not represent the collective views of FEPS and TASC, but only of the respective authors. The responsibility of FEPS and TASC is limited to approving its publication as worthy of consideration of the global progressive movement. Disclaimer The present report does not represent the European Parliament’s views but only of the respective authors. 978-1-9993099-8-5 4 Table of Contents Table of Contents Methodology 18 Why care about the views of the top 10%? 19 Who are the top 10%? 21 Country comparison 24 Identifying the top 10% 28 How the top 10% has changed 36 Conclusion: so far away yet so close 43 Contextual and policy background 46 Who are the top 10% in the UK? 55 Perceptions of meritocracy and social mobility 56 The top 10% and belief in their own agency 58 Insecurity and the top 10% 63 Giving back: the top 10% 65 Public services and the top 10% 67 Politics and the top 10% 68 Inequality: what do the top 10% think about it? 71 Inequality: do the top 10% see a role for the state in addressing it? 76 The private sector’s role in addressing inequality: the top 10% view 80 Conclusion: are the top 10% ready for a new social contract? 81 Introduction 88 Background: the Swedish context 90 1 Inequality and the top 10% in Europe High-income earners in Sweden 93 The Swedish interview study 95 Perceptions of meritocracy and upward mobility 95 High-income earners in Sweden: an economically secure group 98 Attitudes towards inequality and the welfare state 101 Taxation and social responsibility 105 The role of the private sector: create jobs and pay taxes 108 Political participation and civic engagement 109 Conclusion: the top 10% feel secure for themselves, but not for society 113 Introduction 118 Who are the top 10% in Spain? 125 Investigating social mobility and economic security in Spain 130 Attitudes towards inequality and redistribution 134 Attitudes towards the welfare state 139 Self-perception and relationship with the rest of society 144 Conclusion: the top 10% favour redistribution but don’t see themselves as Introduction 150 Setting the context: globalisation of the Irish economy 150 Economic transformation and social mobility in Ireland 151 Economic insecurity and social divisions in an era of prosperity 152 Who are the top 10% in Ireland? 155 How the top 10% view inequality: what should be done and why 158 Investigating economic opportunity and self-identity in Ireland 160 How to respond to inequality 164 What lessons for policy? 169 Conclusion: the top 10% feel neither secure about their futures or their society’s 171 2 List of Tables and Figures List of Tables and Figures Figure 1: Real disposable income growth by income group 2007-2014, OECD average 17 Figure 2: Real income growth trends across the bottom, middle, and top of the income distribution for OECD-17, 1985-2015 21 Figure 3: Share of national equivalised income by the bottom 40%, top 10%, and top 1% in Ireland, Spain, Sweden and UK, 1995-2018 22 Figure 4: Share of national income of top 1% and top 10% in Ireland, Spain, Sweden, UK, (1980-2016) 23 Figure 5: Real gross disposable income of households per capita (index 2008) 25 Figure 6: Evolution of proportion of people at risk of poverty or social exclusion 26 Table 1: Gross personal income from employment (cash, non-cash), self-employment, Table 2: Gross personal earnings from employment (cash, non-cash) and self-employment 30 Table 3: Equivalised disposable household income weighted by family size 31 Table 4: Net household income as percentage of gross household income 32 Figure 2: Ratio between mean declared minimum to make ends meet and actual net monthly income per household decile 34 Figure 3: Perceived burden of housing cost per household decile 34 Figure 4: Total average monthly housing cost per household decile and segment of top decile 35 Figure 5: Type of tenancy per household decile 35 Figure 6: Evolution of annual individual income per decile and segment of top decile 37 Figure 7: Evolution of share of total capital income per decile and segment of top 10% 38 Table 5: Highest level of education attained, according to income category and country 39 Figure 8: Membership of income decile per occupation 39 Figure 9: Employment per occupation (thousands) 40 Figure 10: Gender distribution by individual income decile and segment of top decile 41 Figure 11: Attitudes of the top 10% versus the remaining 90% towards meritocracy and redistribution 42 Figure 12: Average score (0-10) on trust in various political institutions per income decile 43 3 Inequality and the top 10% in Europe Figure 2: Distribution of the interview sample by occupation, income, gender, age and location 55 Figure 3: Age distribution across income deciles in the UK 56 Figure 4: Occupational category for total population and top 10% 57 Figure 1: Percentage of top 10% of income earners by age 93 Figure 2: Highest educational degree of top 10% of income earners 94 Figure 3: Feeling about household’s income nowadays 98 Table 1: Net household income as percentage of gross household income 122 Figure 1: Cumulative change in real disposable income in Spain 124 Figure 2: Share of income by bottom 40%, top 10% and top 1% deciles between 1995 and 2018 125 Figure 3: Distribution of the interview sample by income, gender, age and place of residence 126 Figure 4: Gender distribution divided by deciles 127 Figure 5: Use of public or private education and healthcare services by monthly income bracket. 140 Figure 1: Educational attainment per income decile 155 Figure 2: Occupational category for total population and top 10% 155 Table 1: Components of household equivalised disposable income by income group 156 Figure 3: Age distribution across income deciles 157 Figure 4: Gender distribution across income deciles and segments of top decile 157 Table 2: Irish interview sample 158 4 Acknowledgements 5 Inequality and the top 10% in Europe Acknowledgements Foundation for European Progressive Studies: Lazlo Andor Lisa Kastner Euléane Omez David Rinaldi Maria Joao Rodrigues Ernst Stetter Authors: Shana Cohen (Ireland) Marcos Gonzalez Hernando (UK and Ireland) Gerry Mitchell (UK) Lisa Pelling (Sweden) Jesús Ruiz-Huerta Carbonell (Spain) Jorge San Vicente Feduchi (Spain) Gonzalo Velasco Monasterio (Spain) Editing team: Marcos Gonzalez Hernando Gerry Mitchell Kishan Patel Lisa Pelling Diana Volpe With very special thanks to Marcos for his invaluable dedication to this research over the past two years, for his contribution and co-writing of several chapters, bringing ideas, collaborators and the research point of publication. Special thanks also to the following: Frances Foley Rebecca Gibbs Neal Lawson Remco Van der Stoep Academics who were contacted at the inception of the project: 6 Acknowledgements Danny Dorling Daniel Edmiston Katharina Hecht For help with recruiting participants: Amy Barker Mark Cooke Mary Hague Marina Kotcheva Ruth Lister Ana Pacheco Margaret Mitchell For transcription: Alys Turner Sylvia Byrne Micheal Collins Marcos González Hernando Sidney Moss Danielle Oliveira Santanna Michelle O’Sullivan Donald Storrie Paul Sweeney Rob Sweeney Diana Volpe John White For contribution towards a roundtable in Stockholm in November 2018: Alireza Behtoui Markus Kallifatides Ida Lidegran Olle Lundberg Gunnar Olofsson Jesper Roine Niels Stöber Stefan Svallfors Daniel Waldenström 7 Inequality and the top 10% in Europe For transcription: Marc André Lovisa Åhl Höijer Niklas Nordblad For project management: Johanna Lindell Enrique Ayala Marín Belén Barreiro Olga Cantó Luis Ayala Cañón Susana Cristo José Manuel Freire Miguel Gómez de Antonio Begoña Iñarra Dulce Manzano Rosa Martinez López Andoni Montes Alberto Penadés Fernando Pimentel Leire Salazar Mercedes Sastre Lucas Tremlett 8 Preface 9 Inequality and the top 10% in Europe Preface There are times when it appears to be that almost everything is changing. Now might well be one of those times. This excellent and very comprehensive report details the concerns and desires of current crisis caused by the 2020 pandemic. It combines careful quantitative and qualitative evidence to make a series of well-grounded and place-sensitive policy suggestions. The eight authors explain taking so much causes huge problems for others. It explains that Europe’s highest paid and otherwise remunerated are much more sympathetic to issues such as racial inequality, gender inequality, and wealth inequality; and that making reference to these issues was more likely to garner some sympathy from the top 10% rather than directly pointing out the inequities of some people being paid so much more than others. We have been taught to believe that ‘we are worth it.’ portion of their income as some show of their piety. Apart from anything else, who would much notice? equivalent universal caps on extravagance. And when this is done, when the top 10% become less well- with less money, they are less wasteful. As this report shows, they are also safer, in Sweden the top 10% weathered the 2008 crash far better than elsewhere in Europe. As this report goes on to show in great detail, the top 10% rely on public services as much, if not more, than everyone else.