OECD report confirmed income inequality bad for the economy

Of the 34 OECD countries, Canada had the 7th-highest gender pay gap.

Ottawa (25 May 2015) — The Organisation for Economic Cooperation and Development (OECD) released a new report this month that provides more evidence that growing income inequality is bad for the economy. According to the report, In It Together: Why Less Inequality Benefits All, a two-point increase in the Gini index (an index used to measure income inequality) between 1985 and 2005 meant economic growth was 4.7 percentage points lower between 1990 and 2010.

Cuts to public spending mean loss of full-time, permanent jobs will hit Canada especially hard

While the drop in the percentage of people employed in full-time, permanent jobs is increasing income inequality throughout the OECD, this drop could hit Canada especially hard.

Compared to other countries, the support people in precarious employment get through government programs is limited. Precarious employment includes self-employment, working part-time or working temporarily.  Across the OECD, government programs lift out of poverty roughly 33 per cent of people in precarious employment. In Canada, the support people in precarious employment receive is enough for only 18 per cent to avoid living in poverty.

This explains why there are far more Canadians in precarious employment living in poverty than elsewhere in the OECD. For Canada, the figure is 35 per cent compared to an OECD average of 22 per cent.

“The combination of the federal government’s failure to halt the loss of quality jobs with a modern industrial strategy and its cuts to programs that low- and middle-income Canadians rely on means we will have another significant increase in income inequality in Canada," said James Clancy, National President of the National Union of Public and General Employees (NUPGE). 

Canada has 7th-highest gap between women’s and men’s earning in the OECD

The OECD report also showed how badly Canada is doing when it comes to reducing the gap in earnings between women and men. Of the 34 OECD countries, Canada had the 7th-highest gender pay gap.

Solutions: Fairer taxes, more investment in public services and better protection for those in precarious employment

The solutions to the problem of income inequality won’t be a surprise to those who’ve supported NUPGE’s campaign against income inequality, All Together Now! The campaign proposes

  • Spend more on public services like education
  • Address working conditions and earnings of those in precarious employment
  • Add measures to ensure the wealthy and multinational corporations pay their share.

And of course, the only way working conditions and earnings of those in precarious employment are going to be addressed is through a stronger labour movement.

OECD report recommendations show how badly conservative policies have failed

The OECD is not known as a bastion of progressive thought. In the past, it has supported many of the policies that have led to increased inequality. The fact it is willing to embrace policies like a more progressive tax system or improving conditions for people in precarious work is a sign of a growing recognition that the conservative policies of slashing government programs and taxes on corporations and the wealthy have failed.  


The National Union of Public and General Employees (NUPGE) is one of Canada's largest labour organizations with over 360,000 members. Our mission is to improve the lives of working families and to build a stronger Canada by ensuring our common wealth is used for the common good. NUPGE

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