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New OECD report concludes that even as global economy improves income inequality continues to grow - Youth and the poor fall further behind


The OECD has just released new data on income inequality and poverty for 2011 (data for 2010 was released in May 2013). These new data, and an accompanying 8-page report, is available at www.oecd.org/social/inequality.htm

An embeddable data visualisation of the publication comparing country results to one another as well as to the OECD average is available at: www.compareyourcountry.org/inequality

The main findings show that:

  • Lower income households either lost more during the crisis or benefited less from the recovery. Real household disposable income has stagnated for the fourth year in a row, with the income of the poorest 10 per cent falling by 1.6 per cent per year between 2007 and 2011.
  • On average across the OECD, the drop in income was twice as large for the bottom 10% compared with the top 10%. The richest 10 per cent of society in OECD countries had 9.6 times as much income as the poorest 10 per cent in 2011, up from 9.3 times in 2007. The widest gap between rich and poor was in Mexico, Chile, Turkey and the United States while Denmark, Slovenia, Finland and the Czech Republic were the most equal.
  • Income inequality, excluding the effect of the welfare state, widened considerably in Spain and Greece, by 1.5 and 3 percentage points respectively in 2011 from 2010. It also increased by more than 1 percentage point in 2011 in Germany, Luxembourg and Portugal, compared to 2010, but fell in Australia, Canada, Ireland, Israel and Sweden.
  • These numbers show that a major part of the gains in living standards achieved by low-income households over the past 20 years prior to the crisis have been erased. The share of people with less than half the real median income prevailing in 2005 rose by 15 percentage points in Greece, and by 8 points in Ireland and Spain alone.
  • Taxes and transfers, such as unemployment benefits, have helped mitigate the impact on disposable incomes. As a result, inequality of incomes after redistribution has risen less sharply.
  • Over the four years since the onset of the crisis, young people (aged 18 to 25) suffered the most severe income losses, while elderly people (over 65) were largely shielded from the worse effects of the crisis. In 2011, for the first time since OECD data are collected, people aged 66 to 75 faced a 25 per cent lower poverty risk than the average population and the lowest among all groups.
  • Significant income losses among the youth took place in Greece, Iceland and Ireland, with large declines also recorded in Spain, Estonia, Portugal, Hungary and the Netherlands.
  • The risk of income-poverty is unevenly distributed among household types. In 2011, the risk of income-poverty was four times higher among jobless households than for the reference population (all individuals living in a household with a working age head. One-worker households also experienced a risk of poverty around 50% higher than for the reference population. Across OECD countries, the risk of poverty among singles and single parents remains disproportionally high.
TUAC has discussed the issue of income inequality with the OECD Liaison Committee in December last year and published a paper for these consultations. Trade Union representatives also raised the issue during the OECD Forum and Ministerial Council Meeting on multiple occasions: