Britain’s “jobs miracle” may have pushed the employment rate to a record high but the Organisation for Economic Co-operation and Development (OECD) just warned that the boom in people working for themselves and those in temporary work is actually creating a massive income gap that could threaten the economic recovery.
The OECD said in its latest report, “In It Together: Why Less Inequality Benefits All” that the richest 10% of the OECD population earns 9.6 times the income of the poorest 10%. In turn, this will threaten economic growth, it says.
“We have reached a tipping point. Inequality in OECD countries is at its highest since records began,” said OECD Secretary-General Angel Gurría, launching the report in Paris with Marianne Thyssen, European Commissioner for Employment, Social Affairs, Skills and Labour Mobility. “The evidence shows that high inequality is bad for growth. The case for policy action is as much economic as social. By not addressing inequality, governments are cutting into the social fabric of their countries and hurting their long-term economic growth.”
The OECD said between 1995 and 2013, more than 50% of all jobs created in OECD countries fell into to either self-employment or temporary placements. Furthermore, women on average earn 15% less than their male counterparts in OECD countries.
“Non-standard workers are worse off in terms of many aspects of job quality,” said the OECD in the report. “They tend to receive less training and, in addition, those on temporary contracts have more job strain and have less job security than workers in standard jobs. Earnings levels are also lower in terms of annual and hourly wages.
“In the six years since the global economic crisis, standard jobs were destroyed while part-time employment continued to increase.”
Apparently, income inequality is the worst in Chile, Mexico, Turkey, the United States and Israel while Denmark, Slovenia, Slovak Republic and Norway demonstrated a smaller gap between the richest and poorest workers.
The OECD said that in order to reduce inequality and boost inclusive growth, “governments should: promote gender equality in employment; broaden access to better jobs; and encourage greater investment in education and skills throughout working life.”