22nd May, 2015
The gap between the rich and poor is widening in OECD nations with the richest 10 per cent now earning 9.6 times the income of the poorest 10 per cent, according to a new report.
The report, In It Together: Why Less Inequality Benefits All, which looks at incomes in countries including Australia, Canada, the UK, US, Korea, Mexico and Spain, also found that wealth has become more concentrated at the top end than income finding that, on average the 10 per cent wealthiest households hold half of total wealth while the next 50 per cent hold the other half and the poorest 40 per cent hold just three per cent.
Launching the report in Paris this week, Angel Gurr‚àö‚âÝa, OECD secretary-general, said that a "tipping point" had been reached with inequality in OECD countries at its highest since records began.
"The evidence shows that high inequality is bad for growth," she said. "The case for policy action is as much economic as social. By not addressing inequality, governments are cutting into the social fabric of their countries and hurting their long-term economic growth."
The report points out that while the growth in temporary and part-time work as well as self-employment has created work opportunities, it has also contributed to higher levels of inequality with many non-standard workers now worse off. It also notes that addressing the gender gap has helped to stem the rise of inequality but notes that women are still about 16 per cent less likely to be in paid work than men and earn about 15 per cent less than men.
The report shows that, of the OECD countries, inequality is highest in Chile, Mexico, Turkey, the US and Israel, and lowest in Denmark, Slovenia, Slovak Republic and Norway. Inequality is even higher in major emerging economies although it has fallen in many including Brazil.
In a bid to address the rising inequality, the OECD says governments should promote gender equality in employment; broaden access to better jobs; and encourage greater investment in education and skills throughout working life.
It says redistribution via taxes and transfers is also an effective way to reduce inequality, noting that in recent decades, the effectiveness of redistribution mechanisms has been weakened in many countries. "To address this, policies need to ensure that wealthier individuals, but also multinational firms, pay their share of the tax burden," the OECD says in a statement.
The report found that in Australia, the average income of the top 10 per cent of earners is almost nine times higher than that of the bottom 10 per cent in, up from a ratio of 8 to 1 in the mid-1990s while 10 per cent wealthiest people own 45 per cent of wealth and the bottom 20 per cent owns 17 per cent of all wealth.
Follow this link to see the full report.
– DAVID ADAMS
