Income gap at highest level in 30 years, OECD says | News | DW | 21.05.2015
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Income gap at highest level in 30 years, OECD says

The OECD has released a document examining global patterns in distribution of wealth. Focusing on changes in labor practices and the participation of women at the workplace, it encourages various redistribution policies.

The income gap between the rich and poor around the world is at its highest level in 30 years in some places, according to a 330-page report by the Organization for Economic Co-operation and Development (OECD).

"The gap between rich and poor keeps widening. Since [the recession], disparities widened and in many OECD countries inequality is today at its highest since data collection started," the report said. "This long-run increase in income inequality does not only raise social and political but also economic concerns."

The study also scrutinized the most recent variations of the so-called Gini index, the coefficient used to characterize a country's income distribution. While some European Union countries fared at the top of the list with a Gini coefficient around 0.25, EU countries with struggling economies, such as Greece and Spain, but also the UK, came in much closer to the value of 0.35.

Nonstandard work contracts

The report also evaluated how the latest trends in economic activity around the world may have affected growth patterns and subsequently issues pertaining to inequality. An analysis of structural changes to the labor market was featured as a key topic in the report.

It said that while the rise of "non-standard work" before and during the recession could be regarded as a steppingstone to more stable employment, it usually came with its own set of pitfalls:

"In many countries, younger workers, especially those with only temporary work contracts have a lower chance of moving on to a more stable, career job," the report said, noting a decline in permanent, nine-to-five jobs in favor of nonstandard work contracts.

The development of nonstandard work was mainly attributed to advances in technology, which created changes to labor demand. Many nonstandard workers were described as exempted from the same levels of employment protections and benefits as colleagues with standard work contracts. This has resulted in poorer work conditions and overall dissatisfaction. Access to training opportunities and further education were also deemed limited for those working in nonstandard conditions.

Changing patterns in work and restricted education opportunities were jointly criticized for creating some of the most unequal societies in contemporary times.

Economic uptick doesn't trickle down

The study also underlined that as much as 40 percent of the population in many of the 34 OECD-countries had failed to benefit from the more recent pick-up in global economic activity. In some countries, low earners even saw their incomes fall in real terms. The OECD also criticized that increasing inequality hindered further growth.

"Much of the recent debate surrounding inequality has focused on top earners, especially the 'top 1 percent,'" the report said, adding that the relative decline of the bottom 40 percent was not as closely studied.

Mixed marks for Germany

Germany received a mixed review, attracting praise for weathering the recession without exacerbating income inequality while reaping criticism for the distribution of assets and investments among its population.

Among other themes in the OECD report, the authors also focused on changes in women's employment and earnings around the world. They revealed that despite substantial progress in narrowing the gap between the genders, women were still about 16 percent less likely to be in paid work while also earning about 15 percent less than men on average.

The release of the document marked the third installation in a series of reports designed to address universal trends causing inequality across OECD countries. The organization had published related reports in 2008 and 2011.

ss/sms (AFP, AP)

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