People need to feel equal and as if they belong, for a strong recovery from the Covid-19 pandemic.

The Organisation for Economic Cooperation and Development (OECD) has just released its GDP report showing in the UK growth 1.8 percent and 1.3 percent respectively. This is compared to 1.9 percent and 5.5 percent in the previous quarter.

Separately, in its report Does Inequality Matter? the group called for governments and big businesses to promote equal opportunities.

The report says  people are concerned by income disparities, with most saying the income differences in their country are too wide.

This has gone up in the last thirty years, in line with the increase in income inequality.

These perceptions are accurate, says the report. Top earners in the 1980s/ early 90s earned five times as much as bottom earners; top earners now get eight times as much.

What should the pay differences be?

People believe, on average, that top earners should earn a maximum of four times as much as the bottom earners.

Most people also feel the government could increase taxes to bridge the gap between income differences but were worried that taxation could be mis-targeted.

The more people are concerned about inequality and low social mobility, the higher their demand for redistribution of funds.

Where is tax demand low?

Demand for more progressive taxation is also lower where people believe that disparities are justified by differences in personal effort, rather than to circumstances beyond people’s control.

For example, in 2018 in Poland 25 percent said poverty is due to lack of effort rather than injustice or bad luck, while in Germany that figure is 4 percent.

In the average OECD country, a quarter of people think more than 70 percent of the national income goes to the 10 percent richest households.

Does socio-economic status matter?

Furthermore, the large differences in people’s views on inequalities has grown in the last three decades, even among people with similar socio-economic status.

This, the report warns, is evidence of growing polarisation.

In most OECD countries there is an increasing gap between those who believe inequality is high and those who believe it is low.

There is a danger that those who feel pay inequality is at an all-time high will also feel excluded.

 

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Working with over 100 countries, the OECD is a global policy forum that promotes policies to preserve individual liberty and improve the economic and social well-being of people around the world.