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Economic crisis comes on top of growing inequality as shown in OECD report – Trade unions call for urgent action to stop growth in poverty

The economic crisis is leading to a rise in unemployment across the OECD but this comes on top of to decades of rising inequality in most OECD countries as shown by a major OECD report published on 21 October. “The poor and those at the bottom of the income distribution have not gained from recent growth. A rising tide has not lifted all boats – in fact, many boats have sunk” said John Evans, General Secretary of the Trade Union Advisory Committee to the OECD. “With a recession now imminent, low income earners will be the least able to protect their families against the worsening economic tide. This OECD report must mark the end of ‘trickle down economics’. OECD governments must target recovery programmes to support those on low incomes who risk being pushed into worse poverty. But beyond this they have to strengthen the policies and institutions that can distribute income and wealth more

fairly”.



The OECD report “Growing Unequal” shows that the concern that economic growth has not been shared fairly is well founded. Inequality of incomes was higher in most OECD countries in the mid-2000s than in the mid-1980s. Despite strong economic growth over the past five years two thirds of OECD countries experienced an increase in poverty and inequality.

The analysis of income distribution and poverty in OECD countries reveals that:

• The gap between the rich and poor has widened. On average the income of the richest 10 % of citizens is almost nine times higher than that of the poorest. However, in the Nordic countries, in Denmark, Sweden and Finland the gap is much smaller (5-6 times).
  
• Around one person in 10 across the OECD had an income below half of the national median income. On average, the poorest 10 % of the population have an annual income of about US-$ 7 000 or less.
  
• The United States not only has one of highest levels of inequality (the ratio of the top 10% to the bottom 10% is 16:1). It has also experienced a significant increase in inequality since 2000.
  
• While paid work can reduce the risk of poverty, there is no guarantee that more jobs and higher employment do reduce poverty. The rising incidence of non-standard employment has widened the earnings distribution and contributed to the increase in poverty.
  
• Lack of intergenerational earnings mobility has remained a serious problem in many countries. Only a few countries stand out positively with regard to higher intergenerational earnings mobility. In Denmark, Norway, Finland as well as Australia and Canada, less than 20% of the differences in parental earnings are passed on to the children.
  
• Government policies are important. Cash transfers and income taxes do reduce inequality and poverty. However, due to welfare state cutbacks the impact of taxes and benefits on both poverty and inequality has fallen in the past decade.

According to TUAC, the findings of the OECD report “underscore the imperative for economic and social policies that are focused on both growth and on ensuring that its benefits are fairly shared. In this crisis and beyond we have to rebuild and strengthen the institutions that can redistribute wealth”.

For more information on this report contact: http://www.oecd.org/document/45/0,3343,en_2649_201185_41502445_1_1_1_1,00.html

For more information on the trade union analysis of the report, contact: tuac@tuac.org – Tel.: +33 (0)1 55 37 37 37

TUAC has consultative status with the OECD and represents 66 million workers in 58 affiliated organisations in the 30 OECD countries.



OECD Secretary-General's launch speech: