University:
London School of Economics and Political Science
Course:
L400 | International Social and Public Policy
Academic year:

2022
Views:

258

Pages:

24
Author:

Prerna T

Inequality 1 Types of Inequality Wealth g. inhentarice, asset ownership- houses etc. income Education, employment, gender, monote Remember... • Wealth and income are not the same, but mequalities of wealth often lead to inequalities of income. >meone nequality negerses tribet the 2 to which imon imone to the in > Wealth extent manrer 1 3 UK Inequality (2018) How is Income shared in the UK? 24/02/2022 UK Income Distribution 2018/19 10% eum 14,200 M local income store tas ohum 90% large mpion Jisu wome Mark deuten tap 10% then leep Ma 2 24/02/2022 Causes of Inequality 2. Technology-both the industrial revolution and the IT revolution increased inequality because... - Technology usually replaces unskilled labour, who tend to lose their jobs and become poorer. But technology tends to cause skilled labour to become more productive, thereby commanding higher salaries. Technology usually drives up the return to capital which means that companies make more profit some me of which is redistributed as dividends to those who own shares (such as wealthy individuals). unerpiaget progt Nwealth of alrends than men 2021-Chig Executives in k 21 earned 159% their eniptoyees. Causes of Inequality 3. Policies In the era of information technology and globalisation, it is simply more difficult to tax mobile capital that can easily move from one jurisdiction to another. This has increased inequality as the rich have benefitted from investments in property, shares and bonds. More recently, since the financial crisis, Quantitative Easing has increased wealth due to a rise in demand for bonds and shares from central banks in the UK and US, leading to a rise in bond and share prices (and a consequent increase in wealth). 22 up prites walth opert all fivenee aspf 11 Causes of Inequality 4. Labour Market Changes Underemployment - high employment levels in the UK disguise important changes in the labour market. The UK has a much higher level of part-time work than in most other developed economies, and surveys indicate that as much as 8% of the workforce is now under-employed. On top of that, self employment has risen to around 15% of the workforce (4.8m). Almost a million people are now on 'zero hours contracts', which provide little or no security at all. Declining trade union power has reduced wage bargaining power for lower paid workers. Proliferation of zero hour contract jobs and sharing economy jobs (Uber drivers, Taskrabbit etc) have also reduced employee rights and bargaining power. X 23 24 Zero hour contracts explained Zero hour contracts are also known as casual contracts. Zero hour contracts are usually for 'piece work' or 'on call' work, eg interpreters. This means: Workers on zero hours contracts are on call to work when needed Employers don't have to give these workers work Zero hours workers don't have to do work when asked Zero hour workers are entitled to statutory annual leave and the National Minimum Wage in the same way as regular workers. Employers can't do anything to stop a zero hours worker from getting work elsewhere. The law says they can ignore a clause in their contract if it bans them from: looking for work accepting work from another employer Employers are still responsible for health and safety of staff on zero hour contracts. 12 Zero Hours Contracts in reality • Based on analysis of Labour Force Survey data for 2011 to 2016, the Resolution Foundation, an economic think tank, estimated that workers on zero-hours contracts earned on average 6.6% less per hour (93p per hour) than employees with similar characteristics and In similar roles who were not employed on zero-hours contracts. • Although employee rights are supposed to be the same, it does depend on the employee status, many of those on zero hours contracts may still still be c be classed as s as self-employed lin which case they will not qualify for employee rights. Also, even if classified as employees, many employee rights accumulate over time and those on zero hours contracts may not find it easy to build up enough continuous service to qualify. This makes zero hours contract workers generally easier to 'hire and fire' than other workers. This leads to workers having very little bargaining power to raise wages. X 25 The Kuznets curve In economics, a Kuznets curve illustrates the hypothesis that as an economy develops, market forces first increase and then decrease economic inequality. The hypothesis was first advanced by economist Simon Kuznets in the 1950s and '60s. One explanation of the Kuznet's curve suggests that early in development, investment opportunities for those whe-have money increase, while-an-influx of cheap rural labour to cities holds down wages. In the later stages of development, affluence spreads to lower wage eamers via 'trickle down' or progressive policies which redistribute income from rich to poor and improve equality of opportunity Suealth nodotributed through laxation & gor 13 Spendeats/23 26 capital anything plains tax. tax on any! that buy at profit, 24/02/2022 Policies to reduce inequality tax threshold. to & wealth inequality Wealth Contor standard rate : 40% Lut don't pay that m the whole 23031 oxan per ask jor 20 policies for icone in but if megrend yeverally do wealtht ivone Incom Labour Market NEED A 29 Polpes that etpooplu back to work Po ces that reducв порокат потрбаsont Poises theit improve the soils of the satuount ong, duration 1 Reduces Inequality Increases Inequality Progressive or Regressive? In the UK we have a progressive tax and benefits system • This means, the government takes more tax from those on higher levels of income, and redistributes this money via benefits and tax credits to those on lower incomes. iwave tak progrecate VAT: regreasبدز