Income and Poverty Gap decreasing in the UK? Is the OECD sure?

An OECD report (21 October, 2008) trumpeting a fall between income inequality and poverty in the UK was greeted with ambivalence today as it went on to describe how the gap between the rich and poor is still greater in the UK than in three quarters of other OECD countries. The Organisation for Economic Cooperation and Development (OECD) delivered its report today to a somewhat unenthused media. The BBC’s news website was typical of the more cautious consensus: “Rich and poor gap 'narrows' in UK”. Despite initial bouts of optimism surrounding the report, closer inspection offered less comfort; the report focused on the period between 2000-2005 (a period of significant global growth) - from when the pattern has ceased being ‘positive’ - and more crucially - the report comes in as the UK enters a recession of unknown magnitude, through which inequality and poverty could increase again significantly. Despite income inequality and poverty falling somewhat since 1990 and falling faster in the United Kingdom than in any other OECD country since 2000, the current picture is bleak. The UK is still a long way behind other OECD economies, and the current torrid economic conditions could set us back decades. A summary of OECD findings: The Development of income poverty • Earnings have become much more unequal in the UK: the wage gap has widened by 20% since 1985, with much of the widening occurring towards the start of this period. • 16% of all households with a working-age head are jobless – only Belgium, Germany and Hungary have more people in households where no one has a job. But the number of children living in workless households has been falling recently. • The number of people living alone or in single-parent households has increased more rapidly than in all other countries. The average household size in the UK declined from 2.4 to 2.1 (compared to an OECD average decline of 2.7 to 2.6) between 1985 and 2005. This has widened inequality. • Income poverty – that is, a household with less than half the average (median) income for its country – fell from 10% to 8% between the mid-1990s and 2005. For the first time since the 1980s, the poverty level is well below the OECD average. • The number of children living poverty fell from 14% to 10% between the mid-1990s and 2005-- the second largest fall (behind Italy) over this period. Even so, child poverty rates are still above the levels recorded in the mid-1980s (7-8%) and mid-1970s (5%). • There is less social mobility in the UK than in Australia, Canada and Denmark. In this respect it is similar to the United States and Italy. What your parents earned when you were a child has much more effect on your own earnings than in more mobile countries. About the OECD: [The] OECD brings together the governments of countries committed to democracy and the market economy from around the world to: • Support sustainable economic growth • Boost employment • Raise living standards • Maintain financial stability • Assist other countries' economic development • Contribute to growth in world trade OECD also shares expertise and exchanges views with more than 100 other countries and economies, from Brazil, China, and Russia to the least developed countries in Africa. (www.oecd.org) For more Info regarding the above article, go to: www.oecd.org/els/social/inequality