Divided We Stand.

 The OECD revealed today that income inequality in the UK has risen faster than any other OECD country since 1975. In the UK, the top 10% have incomes 12 times greater than bottom 10%, up from eight times greater in 1985 (it’s probably worth noting that 41% of the recent riots suspects live in the 10% most deprived places in England).

The Gini coefficient is a measure of income inequality: the figure is a measure between 0 and 1 – the closer to 0, the more equal a society is. The graph below illustrates quite clearly how the liberalising economic reforms that have swept the world since the 80’s driven up inequality.

These are the policy recommendations the OECD is suggesting for countries as a result of these findings.

  • Employment is the most promising way of tackling inequality. The biggest challenge is creating more and better jobs that offer good career prospects and a real chance to people to escape poverty.
  • Investing in human capital is key. This must begin from early childhood and be sustained through compulsory education. Once the transition from school to work has been accomplished, there must be sufficient incentives for workers and employers to invest in skills throughout the working life.
  • Reforming tax and benefit policies is the most direct instrument for increasing redistributive effects. Large and persistent losses in low-income groups following recessions underline the importance of government transfers and well-conceived income-support policies.
  • The growing share of income going to top earners means that this group now has a greater capacity to pay taxes. In this context governments may re-examine the redistributive role of taxation to ensure that wealthier individuals contribute their fair share of the tax burden.
  • The provision of freely accessible and high-quality public services, such as education, health, and family care is important.

I wont go into much detail on this, but these recommendations are the complete opposite to the policies currently being implemented by the Conservative government. And they tell  us the cuts wont hurt…