The Gap in Rich Countries is Widening

The gap between the rich and the poor has deepened in the past 20 years in more than three-quarters of countries, according to the OECD study Growing Unequal on wealth distribution in member countries. Inequality in these countries has cumulatively increased by seven percent.

The study finds that the rich have benefited more from economic growth in the past two decades than the poor. In some countries such as Canada, Finland, Germany, Italy, Norway, and the USA, the gap between the rich and the middle class has also increased. Poverty is defined as an income level below 50 percent of the national average. 
Presenting the report on Tuesday in Paris, OECD Secretary-General Angel Gurría warned of the dangers of increasing inequality and the need for governments to address this issue of social division in society and between regions that are differently positioned in the distribution of income and developmental resources.

– Ignoring increasing inequality is not an option – said Gurría.  The highest income inequality is in Mexico (at a ratio of 1:25), Turkey, Portugal, and the USA. The countries with the most equitable income distribution are, as expected, Denmark and Sweden. Only a few countries have managed to reduce the gap between those with the highest and lowest incomes – this has been achieved by France, Greece, and Spain.  In the USA, the distancing of social classes was most evident: the average annual income of the richest 10 percent was $93,000, the highest among the 30 countries studied. The poorest 10 percent earned only $5,800, which is 20 percent lower than the OECD average.

The biggest reason for the increasing income inequality between the rich and the poor has been changes in the labor market, where low-skilled workers are finding it increasingly difficult to find jobs, and there are more and more single parents. However, the most alarming fact is that children are becoming poorer and that they and youth are exposed to a 25 percent higher risk of poverty than the general population. In most developed countries, there are systems aimed at mitigating the effects of income inequality, through the tax system and social protection system, but the effectiveness of such systems has been decreasing over the past decade. Nevertheless, without such measures, economic differences between social groups would be even greater.  (Davorka Zmijarević)