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The new OECD report In It Together: Inequality reached its Tipping Point


  • TUAC Background Paper on Inequalitypdf

The new OECD report In It Together: Why Less Inequality Benefits All highlights key areas where inequalities originate and where new policy approaches are required. It looks in more detail at the question how trends in inequality have affected economic growth and through which channels; looks at the consequences of the recent crisis and fiscal consolidation on household incomes; analyses the impact of rising nonstandard work, job polarisation and documents levels of wealth concentration and indebtedness; last but not least it also discusses the role for redistribution policies in OECD.

The report comes at the right time as “Rising income inequality is no longer just an ethical or normative issue – it has economic costs and restrains a broad-based and sustainable recovery. There are also serious long-term consequences. High inequality leads to low inter-generational mobility. The capture of the policy agenda by top income earners through their excessive domination of political funding in some countries is leading to a serious distortion of public policy and builds inequity into economic growth models”, said John Evans, General Secretary of the TUAC. 

TUAC has released a background paper on the role of collective bargaining as part of a comprehensive strategy to reduce income inequality for the upcoming OECD Ministerial Meeting and Forum (June 2-4): http://www.tuac.org/en/public/e-docs/00/00/10/6D/document_doc.phtml . The paper sets out the evidence on causes and effects of rising income inequality and outlines policy options to reverse this trend. Trade Union representative will be at the OECD Forum and Ministerial to reiterate these points.
“In It Together” reiterates key findings of previous analysis, namely that gap between rich and poor keeps widening. Today, the gap between rich and poor is at its highest level since 30 years. The report also points out that during the crisis, income inequality continued to increase, mainly due to the fall in employment. Real household incomes fell substantially in countries hit hardest by the crisis.

Moreover, the report substantiates concerns expressed by TUAC and its affiliates, regarding the rise in non-standard work and its adverse impact upon inequality. According to the report more than half of all job creation since the mid-1990s was in the form of non-standard work. Unsurprisingly, many non-standard workers are worse off with regard to key aspects of job quality, such as earnings, job security or access to training.

With regard to the need to design and implement policies to tackle high inequality, the report emphasizes rightly the need to focus on “quality of jobs; jobs that offer career and investment possibilities; jobs that are stepping stones rather than dead ends.” Moreover, the report implicitly emphasizes the need to reverse the trend towards tax systems becoming less progressive. It is particularly welcome that the report concludes that “policies need to ensure that wealthier individuals but also multinational firms pay their share of the tax burden” and that governments must maintain appropriate income-support policies as well as countercyclical social spending.