The COVID-19 crisis is endangering many of the gains achieved by the Sustainable Development Goals (SDGs). Economic insecurity and inequality are examples of structural problems that are worsening due to the COVID-19 crisis. The declining trend of the labour income share of GDP compared to the capital income share shows that the richest proportion of the population is benefitting while the poorest proportion of the population is losing out.
Market income inequality in the western economies is too high and the mobilisation of huge resources will be required to reduce inequalities to an acceptable level. In this scenario, states will use debt and tax leverages to fight inequalities. This introduces a challenge for taxation systems as the post-COVID-19 economy cannot afford a taxation system that levies too little on companies. Welfare states are national even though they might be more effective if they were enriched with some cross-border solidarity elements. But that would require a consensus that does not exist yet.
Climate change must also be seen as a source of inequalities and this results in the green and social agenda being intertwined.
The SDG 8 monitor of the ITUC shows that there is no trade-off between economic growth and reduction of inequality, but we need to go beyond GDP as the only measure, because growth alone does not guarantee greater well-being for all. The SDG 8 monitor further shows us that there is a weak correlation between GNI per capita and employment quality, that most countries are not faring well in terms of labour vulnerability and that the respect of workers’ rights is not related to the economic performance of countries.
Growing inequalities call for solutions that question the current view of redistribution and move towards a Welfare State 3.0 that combines the goals of reducing inequalities and promoting economic growth in order to build a new economic and social context (see also topic 8).
Trade unions play an important role in influencing labour law to ensure that income is distributed more equally before taxes and transfers. Through social dialogue and collective bargaining, trade unions should level the wage index with the labour productivity index to protect disposable income. They should also push for social and labour market conditionalities (based on the SDGs) for funds and investments (see also reciprocity in Topic 3).
The direction towards socio-economic recovery and resilience will have to be steered through specific measures that rethink taxation systems for a more progressive taxation, ensure the creation of decent work, tackle climate change and foster new digital and green technologies. This requires a new concept of work and a new concept of wealth, a new social contract in other words (see also Topic 3).
Redistribution policies must be based on a genuine sense of solidarity within and among countries (multilateralism/international cooperation/cross-border solidarity are also treated in topics 1, 3 and 7). We must create solidarity between member states and have a true welfare state at supranational level, moving from a national social contract (also in topic 1 and 5) to a European and global social contract.
A major challenge for this will be “governance”, not only at national level, but also at supranational level. We must strengthen multilateralism and global governance to provide global responses (see also topic 1). In the SDG context, data are especially importance for governance. We must improve the availability and comparability of indicators to put in place the necessary policies for an SDG-centred recovery.
To face the current crisis, we need a New Social Contract that builds on an SDG8-driven recovery that distributes more to the low and mid-income households through wages and social transfers. Through social dialogue and collective bargaining, trade unions must enhance the redistributive role of labour law and promote fairer taxation systems in order to reduce market income inequalities, thus redesigning social protection schemes that provide adequate and universal coverage for new needs. Multilateralism and regional and global governance based on solidarity must be strengthened, and data availability and comparability must be improved.
Rolph Van Der Hoeven
Erasmus University (EUR) in The Hague
Rolph van der Hoeven is emeritus Professor of Employment and Development Economics at the International Institute of Social Studies (ISS) of Erasmus University (EUR) in The Hague, the Netherlands, member of the Advisory Council on International Affairs (AIV) of the Dutch Government, and member of the Committee for Development Policy of the UN (UN-CDP). He also serves on the board of a number of international institutions, NGO’s and journals. Rolph was formerly Director of ILO’s Policy Coherence Group, where he spearheaded the ILO’s interaction and cooperation with the UN, IMF and World Bank on policy coherence. He was also Manager of the Secretariat of the World Commission on the Social Dimension of Globalization. Other previous positions include Chief Economist of UNICEF in New York, where he was part of the team that launched the campaign on Adjustment with a Human Face, and policy analyst for the ILO in Ethiopia and Zambia, where he advised African governments on employment and income policies. He was involved in various research projects of the United Nations World Institute on Development Economics Research (UNU-WIDER) on globalization, inequality, and employment.
Rolph holds a PhD in Development Economics from the Free University (VU) Amsterdam and an MSc in Econometrics from the University of Amsterdam (UVA) He is the author of a dozen books, and many articles and book chapters on issues as basic needs, income inequality, employment, structural adjustment, globalization and sustainable development. His latest (co-authored) volume is Sustainable Development Goals and Income Inequality
Director of Research Department
European Trade Union Institute
Nicola Countouris is the Director of the Research Department at the European Trade Union Institute (ETUI) and a Professor in Labour Law and European Law at the Faculty of Laws of University College London (UCL). Before joining the ETUI and UCL he had taught law at the Universities of Reading, LSE, and Oxford, where he also obtained his DPhil under the supervision of Professor Mark Freedland. He has acted as an independent expert for the International Labour Office, the ETUC, and on a number of European Commission funded projects. He is the author and co-author of some 55 publications, including The Legal Construction of Personal Work Relations co-authored with Mark Freedland and published by OUP in 2011.
Vice Director Dep. Economic and Social Policy
International Trade Union Confederation
Paola Simonetti is Deputy Director of the Economic and Social Policy Department at the International Trade Union Confederation (ITUC). She leads trade unions engagement on the Sustainable Development Goals (SDGs), promoting trade unions action at national, regional and global levels, including SDGs related policy processes with multilateral institutions such as the UN, ILO, OECD, and the EU. Prior to that, Ms. Simonetti was policy advisor at the ITUC on development policy, and previously served as Head of the European Office of CISL Italian trade union since 2003, in charge of advocacy and regional programs coordination.
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