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OECD In It Together 2015 Final

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on 24 May 2016

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Transcript of OECD In It Together 2015 Final

“We have reached a tipping point. Inequality in OECD countries is at its highest since records began"
- Angel Gurria, OECD's Secretary General
Inequality increased in good times, and it continued increasing in bad times.
at the top end, and especially among the top 1%, a surge in incomes.
at the bottom end, much slower income growth during good times and often a fall in incomes in bad times, especially during and after the Great Recession.
Was the crisis a game changer?
Higher inequality drags down economic growth
Women’s employment put a brake on increasing inequality.
What can policy makers do?

Thanks for your attention
Growing inequality is harmful for long-term economic growth
Foster women’s participation in economic life
But it is not only about poverty,
it is about
the bottom 40%
The rise of income inequality is not only about the top of the distribution.
During the crisis, in a majority of countries incomes of the poorest households fell behind in relative and, often, in absolute terms.
Annual percentage changes between 2007 and 2011, by income groups, total population.
The risk of income poverty has shifted from the elderly to the young, continuing a trend lasting for the past 30 years.

Relative poverty rate of the entire population in each year = 100, mid-1980s to 2013 or latest available year.
It’s about jobs
Between the mid-1990s and the start of the crisis, 43% of all job creation was in the form of non-standard work; including the crisis years brings the share up to 56%.
Non standard work
: people working part-time, on temporary contracts or self-employed.
Non-standard work leads to more inequality
But this is not often the case...
Wealth concentration widens disparities
The bottom 40% owns 3% of wealth
Wealth is even more concentrated at the top than income.
It is not just that the poorest are falling behind. It is inequality affecting the bottom 40% which brings down overall growth.
Why do we care about rising inequality?
Only because we made progress (in female labour market participation), we have been able to bring the Gini down.
Redistribution plays an important role for decreasing inequality.
In recent decades, the effectiveness of redistribution mechanisms has been weakened in many countries
Policies need to ensure that wealthier individuals, but also multinational firms, pay their share of the tax burden
Promote employment and good-quality jobs
Strengthen quality education and skills development during the working life
Improve the design of tax and transfer systems for a more efficient redistribution
The top 10% owns 50% of wealth
As inequality rises,
poorer families struggle to
access quality education,
implying wasted potential
and lower social mobility
Average numeracy score by parent educational background (PEB) and inequality
The richest 10%
of the population in the OECD...

... now earns

10 times

the income...
... of

the poorest 10%
This long-term trend has been driven by two main movements.
Poorer pay
Lower access to training
Lower social protection
In 2013, about a third of total OECD employment was in non-standard work.
Non-standard work contributes to job polarisation
Contribution of composition and wage structure effects (women) to percentage point changes in Gini of household disposable income, mid-1990s to 2007 or latest available pre-crisis year
This would be less troubling if non-standard jobs were stepping stones to better and well-paying careers.
Full transcript