Income inequality rising fastest in UK, says OECD

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The UK has been urged to create more employment opportunities and improve social inclusion of those from poorer backgrounds to address growing income inequality.

According to a new report from the Organisation for Economic Co-operation and Development (OECD), the pay gap between the best and worst-paid workers has risen faster over the past few decades in the UK than any other of the 34 OECD countries.

The study found that the annual average income of the top ten per cent of earners in the UK was almost £55,000 in 2008, nearly 12 times higher than that of the bottom ten per cent, who earned an average of £4,700.

This is up from a ratio of eight to one in 1985 and well above the OECD average.

Data also showed that the money earned by the country’s top one per cent of earners doubled from 7.1 per cent of the total UK income in 1970 to 14.3 per cent in 2005.

It highlighted a number of factors that have contributed to the growing gap in income between the richest and poorest workers, including a decline in benefits amounts, taxes becoming less redistributive and more people becoming self-employed.

The OECD proposed a number of targets for the UK to help bring about greater balance in earnings and promote the inclusion in the workplace and education of people from disadvantaged backgrounds.

“Employment is the most promising way of tackling inequality. The biggest challenge is creating more and better jobs that offer good career prospects and a real chance to people to escape poverty,” it said.

“Investing in human capital is key. This must begin from early childhood and be sustained through compulsory education. Once the transition from school to work has been accomplished, there must be sufficient incentives for workers and employers to invest in skills throughout the working life.”

The UK report came as part of a wider OECD study into pay inequality across its member nations, which found that the gap between rich and poor in OECD countries has reached its highest level for over 30 years.

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