INEQUALITY AND DIVISION

The UK is relatively unequal amongst the richer G7 nations, whether assessed by income or asset wealth. Income inequality rose here in the 1980s and has remained reasonably stable since then.

Wealth inequality, similarly, started to increase in the 1980s and has continued to do so steadily ever since. Meanwhile, attitudes to inequality of income and wealth distribution are shifting (see sustainability – social concerns; and corporate governance).

Around the world, opportunities for skilled work may increase while creating division between those with access to high-speed internet connection and other technology necessary for such work and those without such access (see technology - communications). The drivers of change influence inequality but, conversely, the interconnectivity of nations means that inequality drives change. To take just a few examples: the “no one is safe until we are all safe” message reinforces that vaccinating against Covid-19 is a global challenge; combating climate change can only be done globally with low-income countries, least equipped to adapt, inevitably hit worst; and inequality and conflict drive migration from poorer to richer nations. Intolerance of inequality is, however, growing. Pressures to address both domestic and global inequality are likely to increase, and this will influence businesses (see sustainability and Covid-19).

The role of the state is a key driver of domestic inequality because political decisions over social security support and taxes are instrumental in addressing it. Within the workplace, legislation and pressure from internal and external stakeholders can begin to address inequality. In light of the success of gender pay gap reporting, there are signs that pay equality reporting more generally will rise up the political agenda. If we see a shift to the left in politics, we can expect both executive pay and minimum wage levels (see role of the state – state intervention) to come under greater scrutiny. Businesses should also prepare for an increased focus on the terms and conditions, including pay, of those employed in their supply chains (see sustainability – social concerns; and corporate governance).

The pandemic has increased inequalities (see Covid -19 – growth and prosperity). Emerging from it, terms such as the “New Normal” and “building back better” are bandied around, but it remains to be seen whether the opportunity to prepare for a better, fairer future for all is meaningfully grasped.

Inequality and division

Divided world

The world’s richest 1% have more than twice the wealth of the 90% least rich. It is, however, not just inequality of wealth but inequality of opportunity which reinforces this inequality.  Education has a long been seen as an important means to address global inequality. However, today, the size of the task in reducing inequality is illustrated by household internet access across the world’s ten most populous nations. Near universal access in the richer countries contrasts with very low access in poorer countries. 

Comparative inequality

Amongst the richer G7 nations (save for the US) the UK has the greatest income inequality. However, income inequality is dwarfed by wealth inequality. In the UK, 22.6% of wealth is owned by the richest 1% more than the other G7 nations (except the US where the top 1% own 40.5% of wealth).

UK inequality

UK income inequality increased in the 1980s before stabilising. Inequalities in wealth, however, decreased markedly from around 1910 until the 1980s before increasing gradually since then. The richest 1% of the UK population now own slightly under a quarter of personal wealth (down from around 70% at the beginning of the 20th century). Increased wealth over the last decade has been driven (over 80%) by rising asset prices rather than savings.

Attitudes to inequality

A significant majority of the English population consider income distribution to be unfair or very unfair.  Concerns about inequality are even greater in Scotland. Similar views are held about wealth inequality in the UK. These attitudes promise to influence government and businesses in the years ahead.

Part 1 

DRIVERS OF CHANGE

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Part 2 

EMERGING THEMES

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Part 3 

PREDICTIONS

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