Blog Articles

By Maxime Gehrenbeck, Social Platform Intern working on Social Policy

In his editorial of last week, our Director Pierre Baussand used the image of the elephant in the room to describe the inaction of European leaders on the issue of divergence within the Economic and Monetary Union. Everybody can see the problem, yet nobody acts. The same metaphor is probably also suitable to the question of the detrimental consequences of rising inequalities within each country. Although many experts have pointed out their ruinous impact on the economy, including Nobel Price Joseph Stiglitz in his brilliant book The Price of Inequality, there is a clear lack of action in this domain. The unwillingness of political leaders to take serious measures on the poverty target of the Europe 2020 Strategy is a deplorable example of this.

Nevertheless, there are some exceptions, and Scotland is one of them. During the conference “Inclusive Growth: how reducing inequality can boost growth”, organised last Monday [21 September] by the think tank Bruegel, John Swinney, Deputy First Minister of Scotland, was given the opportunity to explain how his government is tackling the issue. The main idea behind the Scottish economic strategy is that ensuring better social inclusion has a direct positive impact on competitiveness and growth as well. Reducing inequalities in education, for example, leads to a better use of the talents and skills of a country, and reducing income inequalities makes economies more resilient to external shocks by limiting the levels of private borrowing. Fighting inequalities and ensuring an efficient and stable economy therefore go hand in hand, and this is why many businesses in Scotland welcomed this ambitious program.

Beyond broad principles, two concrete actions led by the Scottish Government can be cited. The Minister for Fair Work tries to gather businesses and trade unions and help them find common agreements on well paid jobs.  As Mr Swinney explained, their benefits are numerous. Decent wages help businesses increase their productivity, reduce absenteeism and improve staff retention. Since the issue of inequalities includes gender inequalities as well, the Government also invests in childcare in order to increase the rate of employment of women, which is again a way to tackle inequalities while reinforcing the country’s economy.

After the Minister’s speech, Romina Boarini, Senior Economist at the Organisation for Economic Co-operation and Development (OECD), was given the floor to comment on the Scottish policies in the light of research led by the international organisation in the context of its Inclusive Growth Inititative. Insisting on the great similarities between the Scottish and the OECD’s definitions of inclusion growth, she expressed her support for the Scottish strategy. It could constitute a fascinating laboratory to assess the impact of specific policies on the level of living standards as defined and measured by the OECD. It will also help to better understand which policies are favourable to both growth and inequality reduction, such as improving access to education, and which policies entail trade-offs.

What is important to us is that reducing inequalities goes beyond moral responsibility; it is also a matter of economic sustainability, and policy-makers should at least be sensitive to the latter argument. Moreover, this is perfectly in line with what Social Platform has always claimed: social policies are not an obstacle or a counterpart to economic ones; they are on the contrary complementary and inextricably linked.