Ten reasons to care about economic inequality
This month we learned that the majority of Britain’s working population has seen their pay packet increase three-fold over the last 30 years. We also learned, on release of the final report of the High Pay Commission, that this pales into insignificance when compared to what’s been happening in executive boardrooms up and down the country.
Earnings for the CEO of Barclays Bank, for example, increased by 4,899.4% over the period. Meanwhile the earnings of top executives at Barclays and Lloyds Banking Group are now 75 times higher than the average pay of employees in each company; and are 63 times higher in oil and gas company BP.
Wealth disparities are even starker than those for pay. Some 50% of the UK population owns just 1% of the wealth and the richest 10% in the UK has more than 100 times the wealth of the bottom 10%. Little wonder that the slogan of choice for the Occupy Movement in London, reflecting the concentration of income, power and wealth in the hands of a few, is ‘we are the 99 per cent’.
Breaking this cycle of widening economic inequalities will not be easy, but it is vital. Here are ten reasons why we must tackle inequality:
1. It fuels debt and household expenditure, by fostering ‘trickle-down behaviourism’ where people constantly compare themselves to others
2. Inequality within the structure of the UK labour market means initial advantage pays off, with movement across the income spectrum difficult to achieve once you have been allocated your starting position
3. It is bad for the economy, impacting on the tax-take, limiting entrepreneurialism and increasing risk
4. It’s bad for our children; the UK has one of the lowest levels of social mobility with those in a position of economic advantage being able to buy their children advantage (through accessing better schools etc), and so the cycle continues
5. Inequality erodes connections within and between communities, creating social distance, distrust, and limiting civic engagement
6. It drives status anxiety, which for some can increase levels of stress and contribute to mental and physical ill-health
7. Individualism is driven by inequality, crowding-out time for hobbies, friends, and family, all of which are crucial to our long-term emotional and psychological wellbeing
8. Inequality fuels consumerism, meaning we spend at a rate the planet cannot sustain
9. It affects our democracy, as wealth accumulates so does power and our political system becomes at risk of excessive lobbying by those with vested interests
10. Inequality erodes our sense of fairness, a central component of national civic pride
So what to do about it?
There are no easy answers but one of the things we must start to do is treat inequality as an additional and separate challenge to that of poverty. Putting money into the pockets of those who need it most is vital but these measures alone will not address the root causes of social injustice.
Social mobility will never be achieved unless wealth inequalities (including the ownership of land) are addressed; child poverty targets will continue to be missed unless we tackle the hollowing out of skilled and semi-skilled jobs in the labour market; intergenerational inequality will continue unless our childcare and education systems are designed to flatten-out differences in the early years of life; and regional disparities will widen further unless we have an enterprise and investment strategy which loosens the stranglehold of London and the southeast.
Britain went from having inequality levels similar to the Netherlands in 1979 to now being one of the most unequal countries in the developed world. There was no inevitability about this.
As individuals, communities and organisations we may not hold the power to radically reduce inequality ourselves but we do have a voice to put pressure on those who can. Isn’t it time to raise our voices and be heard?
