Gap between high and low wage earners widened since 1990:study

Dharam Shourie

New York, Oct 17 (PTI) The gap in income inequality
has considerably widened around the world since the early
1990s despite strong economic growth that created millions of
new jobs, a new UN report says.

"The report shows conclusively that the gap between
richer and poorer households have widened since the 1990s,"
said Raymond Torres, Director, International Labour
Organisation's International Institute for Labour Studies.

"The present global financial crisis is bound to make
matters worse unless long-term structural reforms are
adopted," added Torres, whose institute is responsible for the
report.

The study, released by ILO, concludes that the major
share of the cost of the current financial and economic crisis
will rest on the shoulders of hundreds of millions of people
who have not shared in the benefits of the previous global
economic expansion.

As economies expanded, global employment rose by 30
percent between the early 1990s and 2007 alongside a
redistribution of income away from labour, with the share of
wages in total national income (G.D.P.) declining
significantly, according to the report, entitled World of Work
Report 2008: Income inequalities in the age of financial
globalisation.

As a result, workers and their families became
increasingly indebted to fund housing investment and
consumption in countries with unregulated financial
innovation, the report found.

The study also said that the excessive income
inequalities could be associated with higher crime rates,
lower life-expectancy, and in the case of poor countries
malnutrition and an increased likelihood of children being
taken out of the school for work.

"Already now, there are widespread perceptions in many
countries that globalisation does not work to the advantage of
the majority of the population," said the study.

The gap in income inequality is also widening between
top executives and the average employee, with the C.E.O.s of
the 15 largest companies in the United States, for example,
earning 520 times more than the average worker in 2007, up
from 360 times more in 2003.

While some income inequality is useful in rewarding
effort, talent and innovation, huge differences can be
counter-productive and damaging for most economies, the
reported notes and stresses that "rising income inequality
represents a danger to the social fabric."