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9 May 2014

The OECD denounces increasing inequality

OECD report inclusive growth

In a report published on 5 May, the Organisation for Economic Cooperation and Development (OECD) issues recommendations, consisting particularly of tax measures, designed to narrow the gap between rich and poor that has been widening steadily over the last thirty years.

“Inequality undermines societies and damages economies,” said OECD Secretary-General Angel Gurría. “It is not enough to put in place policies that harness growth; we must also ensure that the benefits of growth are shared by everyone. This is one of the most pressing challenges we face today.”

The OECD, to which 21 EU member states belong, states that since the end of the 1980s the wealthy have overwhelmingly captured the benefits of growth.

In 2010, the average income of the richest 10 percent of the population in OECD countries was nine and a half times higher than that of the poorest 10 percent, compared with a level only seven times higher 25 years ago. Since the beginning of the financial crisis, this trend has accelerated still further.

In the United States, meanwhile, 20% of all pre-tax income was in 2010 in the hands of the richest one percent of the population, compared with 8% twenty years earlier.

Yet income is not, the OECD stresses, the only factor of inequality. As stated by Angel Gurría in the preface to the report, "It is important to make clear that when we talk about inequality, we must talk about more than income. Employment prospects, job quality, health outcomes, education, and opportunities to build wealth over time matter for people’s well-being and are heavily determined by their socio-economic status."
The report shows, for example, on the basis of statistics from 14 OECD countries, that people who have received a high standard of education live an average of six years longer than those who have missed out on this opportunity.

The OECD accordingly advocates “inclusive growth” that would require public investment programmes to facilitate access of the most disadvantaged sections of the population to education and training, housing, health care, transport, etc.

At the same time, the international organisation urges its members to review their tax systems in order to focus on the redistributive role of taxation that has been increasingly underplayed over the last twenty years, as well as to combat tax fraud and evasion.

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