Mark Deen Paris

The gap between rich and poor is widening across most developed economies as skilled workers reap more rewards and top executives and bankers benefit from a global job market, according to the Organisation for Economic Co-operation and Development (OECD).

The average income of the richest tenth of the population was now about nine times that of the poorest tenth, the Paris-based group said in a report yesterday. The gap had risen about 10 percent since the mid-1980s.

Mexico, the US, Israel and the UK are among the countries with the biggest divide between rich and poor, while Denmark, Norway, Belgium and the Czech Republic are among those with the smallest gap. The earnings multiple is 14 to 1 in the US and Israel, compared with about 10 to 1 in the UK, Italy and Japan and 6 to 1 in Germany and Denmark.

“The social contract is starting to unravel in many countries,” OECD secretary-general Angel Gurria said.

“This study dispels the assumptions that the benefits of economic growth will automatically trickle down to the disadvantaged and that the greater inequality fosters greater social mobility.”

The OECD used a Gini coefficient to measure income inequality. At zero a population would have identical incomes, while at one all income would go to one person. The coefficient stands at 0.316 today, up 10 percent since the mid-1980s. It rose in 17 out of 22 OECD countries for which long-term data are available.

“There is nothing inevitable about high and growing inequalities. Up-skilling the workforce is by far the most powerful instrument to counter rising inequality,” Gurria said. “The investment in people must begin in early childhood and be followed through into formal education and work.” – Bloomberg