What’s happening to inequality?

“People are fed up with a so-called free market system, that has produced grotesque inequality...”

Jeremy Corbyn, 28 September 2016

The Labour leader mentioned in particular “income and wealth” inequality. It’s up to you what you count as grotesque, but to take earners at opposite ends of the income scale, on the minimum wage you’d earn £5.30 an hour as a 18-20 year old. Whereas the average FTSE 100 Chief Executive now reportedly earns £5.5 million a year.

Figures quoted by the Office for National Statistics suggest the richest 10% get almost 30% of gross income in the UK.

There are a lot of different ways to measure inequality. Overall, income inequality actually seems to have decreased slightly in recent years.

“Since 2007/08, there has been a slight decrease in overall income inequality on a range of measures, though from a longer-term perspective remains above levels seen in the early 1980s”, according to the ONS.  

The Institute for Fiscal Studies commented recently that “The combination of strong employment growth, some earnings growth for low-paid workers, and a lack of earnings growth for others, has kept inequality below its pre-recession level”.

But it also said that a slight fall in inequality for most people has been offset by the share of income going to the top 1% continuing to increase, at least up until the recession.

Wealth inequality is a lot harder to measure. We’ve written more about it here.

Income and wealth aren’t the whole argument. Mr Corbyn stated that “Labour’s goal isn’t just greater equality of wealth and income but also of power”.