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Developments and Forecasts of Diversifying Inequalities

Foresight

The 2017 Social Progress Index reveals that while quality of life improves across the globe, there are also some troubling trends: declining personal rights, personal safety, as well as slow and uneven social progress.

Income inequality

While education and health inequality are declining, income inequality is on the rise

  • Income inequality among countries has been decreasing, while that within countries is increasing.
  • Inequalities related to socio-economic background have largely remained persistent over time in Europe.
  • By 2030, the middle class is expected to grow by 150% (to 2 billion people) in the BRIC countries and by 116% (to 730 million people) in the N-11 countries.
    | Related Megatrends: GeopowerConsumerism
  • While inequality in education and health is in decline, income inequality is on the rise; 70% of the world’s population lives in countries where disparities between the wealthiest and poorest have grown over the last 30 years.
  • Extreme poverty rate has declined from 36% in 1990 to an estimated 8.6% in 2018. Nevertheless, given the recent slower rates of decline, the target of less than 3% of the world living in extreme poverty by 2030 might not be achieved. New projections indicate that in 2030, some 480 million people will still be living in extreme poverty (44 million more than the previous estimate); 82 % of them -- almost 395 million people -- will be in Africa. 
  • The Global Slavery Index estimates that 45.8 million people were subject to some form of modern slavery in 2016, in the 167 countries assessed. Some 58% of these are living in 5 countries: India, China, Pakistan, Bangladesh, and Uzbekistan.
    | Related Megatrends: Geopower
  • The gap between advanced and developing economies is expected to keep diminishing, with the emerging market and developing countries continuing to grow considerably faster than the developed ones, given their increasing labor force and expanding markets potential, versus the advanced economies, which are mostly replacement markets. 
  • The share of world GDP (PPP) of G7 countries has been decreasing from over 50% in 1990, to some 33% in 2014 and expected to further decrease to 29% in 2020, while that of emerging markets and developing economies has been increasing from 36% in 1990 to 57% in 2014 and pass 60% in 2020. | Related Megatrends: Geopower
  • The PwC forecasts that by 2050, the world's three biggest economic powers (PPP) will be China, India, and the U.S., each of them with a GDP greater than the next three largest economies (Indonesia, Brazil, and Mexico) combined. | Related Megatrends: Geopower
  • The World Bank estimates that crowdfunding investment in the developing world might be up to $96 billion by 2025, of which $50 billion in China. | Related Megatrends: GeopowerWork;
  • By 2025, 66% of world's economic growth (absolute GDP) is expected to be driven by the world’s richest 600 cities. Unless better urban policies, over the next 20 years, the number of city dwellers might reach 5 billion (60% of the world’s population), the majority in the developing world.
    | Related Megatrends: Urbanisation
  • International Labour Organization estimates that the rate of workers living in extreme poverty conditions will continue to decrease to some 7% by 2020. However, if current trends continue, it is expected that there will be further progress in the years to come, with the number of working poor decreasing by further 55 milion by 2023. Related Megatrends: Work
  • In 2023, the number of workers in extreme and moderate poverty from lower middle-income countries is expected to decrease by 12.5 compared to the situation in 2018 (432 million). 
  • Poverty and social exclusion have been decreasing since 2012. In 2017, they reached levels lower than before the financial crisis. However, in 2017 still 113 million people, or 20% of the EU population, were at risk of poverty or social exclusion. The EU target to decrease this number to 96 million by 2020 will require a considerable effort.
  • In the framework of the 17 SDGs to end all forms of poverty everywhere, the target is to reduce world's extreme poverty to below 9% by 2020 and no more than 3% by 2030. Going beyond reducing poverty, the SDGs require countries to adopt fiscal, wage, and social protection policies to reduce inequality and have the society at large benefit of increasing prosperity. | Related Megatrends: Geopower; Work
  • ​Unless economy patterns change to address the growing inequality gap, some 500 million people will still be living on less than $1.90 a day in 2030, the SDG of eliminating extreme poverty being missed. | Related Megatrends:  SecurityHealthGovernance; Work
  • The SDG Index and Dashboards Report 2019 shows that most inequality-related goals are facing serious challenges. The poorer countries are closer to the bottom of the rankings, since they lack adequate infrastructure and the mechanisms needed for progress on the SDGs. Also, high-income countries tend to generate negative SDG spillover effects for poorer developing countries (countries with larger spillover: Switzerland, Singapore, Luxemburg, Netherlands, United Arab Emirates, USA, Belgium, UK).

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  • Concentration of wealth is increasing, income gaps are widening, employmentless economic growth seems the new norm, return on investment in capital and technology is usually better than on labour, and future technologies can replace much of human labor; hence, long-term structural unemployment might be a “business as usual” surprise-free forecast. | Related Megatrends: 

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  • Slow economic growth and more people entering the labour market are keeping unemployment high and growing. In 2018, unemployment is expected to stay above 192 million people, with another 1.3 million to be added in 2019. | Related Megatrends: Work; Demography
  • International Labour Organization estimates that the rate of workers living in extreme poverty conditions will continue to decrease to some 7% by 2020.                                                         | Related Megatrends: Work
  • The number of people in vulnerable forms of employment (e.g. self-employed) is also rising. The estimated 1.4 billion people in vulnerable forms of employment in 2017 is projected to grow by 17 million per year in 2018 and 2019. In developing and emerging economies the rates are above 76% and 46% respectively.
  • Some 20% - 30% of working-age population (162 million people) in Europe and the USA are engaged in some kind of independent work.
  • More than 50% of independent workers in Europe are not covered by unemployment benefits.| Related Megatrend: Inequalities
  • Older population keeps active longer (by will or by necessity);
    over 50% of people 65+ in Germany, Sweden, and UK are earners through some independent work. 
    | Related Megatrends: WorkDemography

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Digital divide

While the world becomes increasingly hyperconnected, the digital devide is the fastest growing inequality.

  • Some 4 billion people (most in rural, isolated communities) do not have internet access. | Related Megatrends: Technology; Work
  • Fighting educational inequalities and granting access to education to all, will decrease poverty and social exclusion significantly. The risk of poverty and social exclusion is three times higher for individuals with lower educational attainment.
  • While the world becomes increasingly hyperconnected, digital inequality (increased by the development of a digital oligarchy) is the fastest growing inequality, impacting all sectors of activities worldwide; (e.g. over 95% of all bitcoins in circulation are owned by about 4% of the market (1% of the addresses control 50% of the entire market)).
    | Related Megatrends: TechnologyEducationWork
  • Most of the jobs which are anticipated to expand until 2025 require at least a moderate level of digital skills combined with strong non-cognitive skills (e.g. communication and teamwork).
  • 44.5% of the EU population has insufficient skills to participate in the digital economy and society. 
  • This divide does not only exist between rich and poor but between different age groups as well; the Millennial generation, also known as Generation Y and Net Generation view technology as a functional necessity, not a modern convenience.
  • Digital competence developments are observed since very young age across Europe, mainly in family context and in an uneven and patchy way, depending mostly on the digital landscape available and on the digital knowledge in family. | Related Megatrends: Education; Work
  • The higher the level of human development, the greater the access to technology.

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Education

The education gap is diminishing.

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Health and nutrition

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  • Nearly half of all deaths in children under 5 are attributable to under-nutrition. This translates into the unnecessary loss of about 3 million young lives a year. Undernutrition puts children at greater risk of dying from common infections, increases the frequency and severity of such infections, and contributes to delayed recovery.| Related Megatrends: Health
  • Child mortality is relatively low in Europe and Central Asia (16%). Evidence from developing countries shows that children in the poorest 20% of the populations are still up to three times more likely to die before their fifth birthday than children in the richest quantiles. The child mortality rate in sub-Saharan Africa is almost five times higher than that in developing countries in Eastern Europe and Central Asia. | Related Megatrends: Health
  • The bigger the gap between the rich and the rest of the population, the higher infant mortality

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Gender inequality

Despite significant progress, gender inequality persists. Over 50% of 10-year-olds live in countries with high levels of gender inequality.

Female participation in the labour force and employment rates are heavily affected by economic, social and cultural issues and care work distributions at home.

  • In the EU, more than 30% of girls and women live in regions failing on gender equality.
  • Although women carry out the major share of global work, they face disadvantage in the world of work, both in paid and unpaid work. The ILO 2017 report notes that women's hourly earnings can be as little as 60% of men's hourly earnings (as of 2016).
  • Although the gender gap in labour force participation has been narrowing over the past 25 years, global labour force participation rate for women is only 49%, compared to 76% for men and no much improvements are foreseen for the near future. The gender gap is closing more rapidly in high-income countries, while continuing to widen in emerging economies.
  • If women’s paid employment rates were the same as men’s,  Oxfam estimates that in 15 major developing economies income per capita would rise by 20% by 2030. Closing the male-female employment gap could boost GDP in the euro zone by 13%, in Japan by 16%, and in the U.S. by 9%. ILO estimates that reducing the gender gap by 25% would increase global GDP by $5.8 trillion by 2025.
    | Related Megatrends: EducationWork
  • Suffrage is virtually universal; however, worldwide, women account for only 23.5% of the membership of national legislative bodies.
  • Women only make up some 18% of the board of directors, although Fortune 500 companies with more gender-balanced boards could outperform the others by as much as 50%.
    | Related Megatrends: Work
  • The Social Institutions and Gender Index shows that countries with better scores have close to 50% women participation in paid jobs, while in countries with high discrimination, female employment is just above 20%. The 2014 SIGI found that none of the 142 economies assessed in 2014 has closed the gender gap; although the gaps for health and educational attainment were closed by 96% and 94% respectively, only 60% of economic participation gap, and 21% of the global political empowerment gap had been closed.
  • The EU Gender Equality Index was 52.9 in 2015, a small improvement compared to 52.4 in 2010.

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  • Currently, more than 60% of the world’s people live in countries where induced abortion is permitted either for a wide range of reasons or without restriction as to reason. However, more than 25% of all people reside in countries where abortion is generally prohibited, while nearly 14% live in countries where abortion is permitted to preserve the woman’s health.
  • Despite overall declines in maternal mortality in the majority of developing countries, women in rural areas are still up to three times more likely to die while giving birth than women living in urban centres. | Related Megatrends: Health; Education; Work
  • Globally, some 33% of women of reproductive age are still affected by anaemia due to undernourishment, with significant health and development consequences for both women and their children.

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Climate change and environment

The poor and people in developing countries bear the greatest burden of climate change and environmental degradation

  • Extremely impoverished people are at most risk from climate change, water scarcity, flooding, limited access to energy and land degradation. They tend to live in vulnerable areas, have no insurance and cannot afford relocation or rebuilding after calamities. | Related Megatrends: Climate and environment
  • The poor and people in developing countries bear the greatest burden of climate change, environmental degradation and depletion of natural resources. Highly dependent on agriculture and fishing, they are especially vulnerable to the depletion of natural resources.  | Related Megatrends: Climate and environment; Natural resources
  • 122 million more people could be living in extreme poverty by 2030, due to climate change, agro-industrialisation, and other challenges affecting small farmers. | Related Megatrends: Security; Climate and environment; Health
  • According to World Employment and Social Outlook 2018, action to limit global warming to 2 degrees Celsius will result in sufficient job creation to more than offset job losses of 6 million elsewhere.
  • People in poorer countries are on average 6 times more likely to be displaced, evacuated or require emergency assistance due to climate-related disasters than those in rich countries. The UN Security Council notes the adverse effects that climate change and greater competition for scarce resources have on the stability of many countries in Western and Central Africa such as Mali, Somalia or Sudan.
  • While there is evidence that climate change and extreme weather events trigger displacement, these movements are mostly short-term and short-distance.

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Sustainable Development Goals

While all UN Sustainable Development Goals aim reducing different forms of inequalities, Goal 10: Reduce inequality within and among countries specifically requests countries that:

  • By 2030, progressively achieve and sustain income growth of the bottom 40% of the population at a rate higher than the national average.
  • By 2030, empower and promote the social, economic and political inclusion of all, irrespective of age, sex, disability, race, ethnicity, origin, religion or economic or other status.
  • Ensure equal opportunity and reduce inequalities of outcome, including by eliminating discriminatory laws, policies and practices and promoting appropriate legislation, policies and action in this regard.
  • Adopt policies, especially fiscal, wage and social protection policies, and progressively achieve greater equality.
  • Improve the regulation and monitoring of global financial markets and institutions and strengthen the implementation of such regulations.
  • Ensure enhanced representation and voice for developing countries in decision-making in global international economic and financial institutions in order to deliver more effective, credible, accountable and legitimate institutions.
  • Facilitate orderly, safe, regular and responsible migration and mobility of people, including through the implementation of planned and well-managed migration policies.
  • Implement the principle of special and differential treatment for developing countries, in particular least developed countries, in accordance with World Trade Organization agreements.
  • Encourage official development assistance and financial flows, including foreign direct investment, to States where the need is greatest, in particular least developed countries, African countries, small island developing States and landlocked developing countries, in accordance with their national plans and programmes.
  • By 2030, reduce to less than 3% the transaction costs of migrant remittances and eliminate remittance corridors with costs higher than 5%.

Other SDGs that are specifically targeting reducing different inequality include:

Goal 1: end poverty in all its forms everywhere requests that by 2030, extreme poverty (people living on less than $1.25/day (revised to $1.90/day) be eradicated everywhere and poverty be at least halved, social protection systems be implemented for all, equal rights to resources and services be assured to all people, and resilience to natural disasters be improved (mainly for the most vulnerable).

Goal 3: ensure healthy lives and promote well-being for all at all ages targets achieving universal health coverage by 2030.

Goal 4: ensure inclusive and equitable quality education and promote lifelong learning opportunities for all.

Goal 5: achieve gender equality and empower all women and girls.

Goal 6: ensure availability and sustainable management of water and sanitation for all.

Goal 7: ensure access to affordable, reliable, sustainable and modern energy for all.

Goal 8: promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all.