Earnings Inequality and Job Positions across Post-communist European Economies

Abstract

The recent global crisis, with its effects on all EU countries, has re-opened the debate about which economic and governance model can assure sustainability of development dynamics. A first interesting dimension of discussion relates the deep roots of the financial and economic crisis to the changed labour market conditions which occurred in the 1990s, since flexibilisation of working positions and low wages may have contributed to the shaping of new inequalities and the growing recourse to indebtedness, which helped spark off the financial crisis, accelerated its transmission to the real sector and weakened the potential forces for recovery (Stiglitz, 2009; Atkinson et al., 2009; Saez, 2010; Perugini et al., 2015). A second point concerns the wage adjustments that occurred in the aftermath of the global financial crisis as a response to the increasing unemployment. According to the OECD (2014), on the one hand wage moderation plays an important role by slowing down unemployment and favouring economic resilience. On the other, it reduces consumer spending and dampens aggregate demand. Moreover, if the fall in real wages asymmetrically affects different categories of workers, inequality concerns and social cohesion issues add to the overall question of the feeble recovery.