Income inequality at its widest in 30 years: OECD
06 Dec 2011
Income inequality the world over has increased and is now at a 30-year high, according to a new report published by the Organisation for Economic Development and Cooperation (OECD).
This has been the result of deliberate action, including cuts in social spending and reduction in taxes on the wealthy, according to the report.
Social security programmes and taxation policies play a major role in income distribution and over the years successive governments in almost all countries have tampered with the system of redistribution of wealth in bid to please vocal sections of the population. This has resulted in rendering the system less effective at redistributing income since the mid-1990s, the report says.
Benefit levels fell in nearly all OECD countries, eligibility rules were tightened to contain spending on social protection, and transfers to the poorest failed to keep pace with earnings growth. This has made the benefit system less effective in reducing inequalities over the past 15 years.
The reduction in top-level tax rates was another factor that affected the redistribution efforts.
''There is nothing inevitable about high and growing inequalities,'' said OECD Secretary-General Angel Gurria.
