------- http://www.ft.com/cms/s/0/5efb38b4-9f3f-11dd-a3fa-000077b07658.html
Rich-poor divide widens, says OECD
By Andrew Taylor
Published: October 21 2008 08:49 | Last updated: October 21 2008 08:49
The gap between rich and poor has widened in most developed countries over the past two decades as economic growth has benefited the wealthy more than the impoverished, according to the Organisation for Economic Co-operation and Development.
The greatest inequality in incomes in the mid 2000s was found in Mexico and Turkey followed by Portugal and the US. Denmark and Sweden were the most equal societies in terms of income disparity in the 30-nation study.
The UK was seventh in terms of inequality – some 8 per cent above the OECD average – using the Gini scale, which measures disposable household income adjusted for household size.
Mexico on the same basis was 52 per cent above average and Turkey 38 per cent. The US had the highest inequality level and poverty rate with the exception of these two countries, the OECD said in a report.
Only a few countries has bucked the trend with France, Greece and Spain reducing income inequality over the past 20 years.
"Rich households in America have been leaving both middle and poorer income groups behind. This has happened in many countries but nowhere has this trend been so stark as in the United States," said the OECD.
The average annual income of the richest 10 per cent in the US – $93,000, using common purchasing parity – was the highest in the OECD. The poorest 10 per cent earned $5,800, "about 20 per cent lower than the average for OECD countries," it said.
Angel Gurría, OECD general secretary said: "Growing inequality is divisive. It polarises societies, it divides regions within countries, and it carves up the world between rich and poor. Greater income inequality stifles upward mobility between generations, making it harder for talented and hard-working people to get the rewards they deserve. Ignoring increasing inequality is not an option."
The biggest reason for the increase in inequality was changes in the labour market, with low-skilled workers experiencing "ever-greater problems in finding jobs". This was despite the fact that there were more people in work across the OECD as a whole, said Mr Gurría. More people living alone or in single-parent households had also contributed to growing inequality.
Children and young adults were 25 per cent more likely to be poor than the population as a whole, while single-parent households were three times as likely to be poor.
Tax and benefit systems had helped to to redistribute incomes and curb poverty but their effectiveness had reduced in the past 10 years. "Trying to patch the gaps in income distribution solely through more social spending is like treating the symptoms instead of the disease." said Mr Gurría.
Better education was a powerful way to achieve growth to benefit all, but countries needed "to do better at getting people into work and giving them in-work benefits to provide working families with a boost in income, rather than relying on unemployment, disability and early retirement benefits."
Some groups in society, however, had done better than others. Those around retirement age had seen the biggest increases in incomes over the past 20 years, and pensioner poverty had fallen in many countries. In contrast, child poverty had increased said the OECD.