FAQs
How bad is income inequality in the UK?
- UK income inequality increased by 32% between 1960 and 2005. During the same period, it increased by 23% in the USA, and in Sweden decreased by 12%.
- In the 1960s Sweden and the UK had similar levels of income inequality. By 2005 the gap between the two had increased by 28%.
- Since the 1980s income inequality in the UK has increased substantially and has returned to levels not seen since the 1920s (1)
- The top 1% earned 14.3% of total UK income in 2005 – double their 7.1% share in 1970 (2)
(2) Divided We Stand: Why Inequality Keeps Rising http://www.oecd.org/document/51/0,3746,en_2649_33933_49147827_1_1_1_1,00.html
What are current top-to-bottom pay ratios in the UK?
Private sector – 262:1 (estimated: for FTSE100 companies that disclosed low pay data)
Public sector – 15:1 (universities)
Voluntary sector – 10:1 (charities with an income above £50m)
The average estimated FTSE 100 CEO total remuneration for all companies was £4.7 million (408 times National Minimum Wage and 219 times 2010 UK median earnings).
The highest estimated FTSE 100 CEO total remuneration in 2010 was for Reckitt Benckiser’s Bart Becht (£14.4 million: 1262 times National Minimum Wage and 679 times 2010 UK median earnings).
(More details at http://www.onesociety.org.uk/research/pay-ratios/)
How does this compare to global inequality?
In the 1960s the income of the top 20% of people was 30 times more than the income of the bottom 20%; by the early 2000s the ratio had increased to 80.
|
World Income Inequality |
1960 |
1970 |
1980 |
1989 |
1998 |
|
% earned by bottom 20% |
2.3% |
2.3% |
1.7% |
1.4% |
1.20% |
|
% earned by middle 60% |
27.5% |
23.8% |
22.0% |
15.9% |
9.80% |
|
% earned by top 20% |
70.2% |
73.9% |
76.3% |
82.7% |
89.00% |
|
Gini |
54% |
57% |
60% |
65% |
70.00% |
|
Top 20% : Bottom 20% |
30:1 |
32:1 |
45:1 |
59:1 |
74:1 |
Source: http://www.umverteilung.de/
What is the social impact of income inequality?
High rates of income inequality are associated with a range of health and social problems, many of which have economic consequences. A summary of this phenomenon is contained in Wilkinson and Pickett’s ‘The Spirit Level’ (a graphic from that source is reproduced below).
Evidence suggests that if inequality was halved in the UK:
- Murder rates could halve
- Mental illness could reduce by two thirds
- Obesity could halve
- Imprisonment could reduce by 80%
- Teen births could reduce by 80%
- Levels of trust could increase by 85%