Inequality and sustainability in a healing and fragmented European Union

As we will see in this chapter, there has been some improvement in the European Labour market in the last couple of years. However, unemployment remains high, especially long-term and youth unemployment. This raises the question of human capital depreciation, stigmatisation and unemployment hysteresis. At the same time both inequality and poverty are continuing have increased since the crisis started European economic policy barely takes into account the academic consensus that measurement of economic performance and social progress is necessary and has to go beyond GDP. To facilitate evidence-based well-being oriented economic policy, we need to reform the European Economic Governance and to establish some kind of sustainable development indicators (SDI) to measure progress beyond economic growth. The SDIs should take into account the protection of the natural capital and social justice to help define and improve policies. SDIs show reasons for optimism in some areas, while substantial progress needs to be done in other areas, including poverty. The chapter shows a very heterogeneous Europe in terms of unemployment, inequality and sustainability. Therefore, both EU as a whole and the dispersion between countries are analyzed in this chapter.