Wage ranges gap still here

First published in Postbag

I THINK it was in the early 1970s that we employees were told that in future we would be awarded a percentage pay rise.

At the time I could not understand how union leaders could accept it.

But much later when I found out the salary of union officials it became clear.

In the 1980s after being made redundant five times I found out you were better off on the dole than in work.

Once you obtain work you pay income tax and national insurance. Immediately you are worse off.

Nothing seems to have changed. I firmly believe percentage wage awards have created the gap between wage ranges.

This is causing benefits to be reduced because the low-paid and pensioners have endured 40 years of lower pay awards.

Anthony Yates, Salisbury

Comments (1)

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3:25am Fri 11 Apr 14

karlmarx says...

You are spot on with your observations Mr Yates however, the actual causes are many and have virtually nothing at all to do with how much union representatives earn. Here are a few facts regarding income inequalities in the UK over the last few decades and it is a damning indictment of whoever was in power at the time, which I consider irrelevant as it is of little consequence who is failing the working population, simply that they are being exploited is enough.

UK income inequality is among the highest in the developed world and evidence shows that this is bad for almost everyone.

Income inequality is the extent to which income is distributed unevenly in a group of people.   

Income

Income is not just the money received through pay, but all the money received from employment (wages, salaries, bonuses etc.), investments, such as interest on savings accounts and dividends from shares of stock, savings, state benefits, pensions (state, personal, company) and rent.

Measurement of income can be on an individual or household basis – the incomes of all the people sharing a particular household.   Household income before tax that includes money received from the social security system is known as gross income. Household income including all taxes and benefits is known as net income1.

2. Pay inequality

A person’s pay is different to their income. Pay refers to payment from employment only.  This can be on an hourly, monthly or annual basis, is typically paid weekly or monthly and may also include bonuses.   Pay inequality therefore describes the difference between people’s pay and this may be within one company or across all pay received in the UK.

3. Wealth inequality

Wealth refers to the total amount of assets of an individual or household. This may include financial assets, such as bonds and stocks, property and private pension rights.   Wealth inequality therefore refers to the unequal distribution of assets in a group of people.

How is Economic Inequality Measured?

There are various ways of measuring economic inequality.  The choice of measure does not change what inequality looks like dramatically2.  However, changes in inequality over time within individual countries can look different if different measures are used3,4.

Commonly used measures of economic inequality

1. Gini coefficient

The Gini coefficient measures inequality across the whole of society rather than simply comparing different income groups. 

If all the income went to a single person (maximum inequality) and everyone else got nothing, the Gini coefficient would be equal to 1.  If income was shared equally, and everyone got exactly the same, the Gini would equal 0.  The lower the Gini value, the more equal a society. 

Most OECD countries have a coefficient lower than 0.32 with the lowest being 0.24.  The UK, a fairly unequal society, scores 0.34 and the US, an even more unequal society, 0.38. In contrast, Denmark, a much more equal society, scores 0.255. 

The Gini coefficient can measure inequality before or after tax and before or after housing costs. The Gini will change depending on what is measured.

This is the most commonly used and most reliable measure of inequality in use today and as you have stated that 'nothing seems to have changed' the actual figures show otherwise. The level of inequality in the UK has been riding steadily since the nineties and, the last four years have seen the the highest rises in inequality since records began. Poverty, and especially child poverty have undergone increases not seen since the war and post war periods in the past four years. I agree with you that union bosses salaries are way too high but, that has nothing at all to do with income inequality and poverty. Perhaps pointing out to them what is actually going on might have some influence on their willingness to accept such large salaries.
You are spot on with your observations Mr Yates however, the actual causes are many and have virtually nothing at all to do with how much union representatives earn. Here are a few facts regarding income inequalities in the UK over the last few decades and it is a damning indictment of whoever was in power at the time, which I consider irrelevant as it is of little consequence who is failing the working population, simply that they are being exploited is enough. UK income inequality is among the highest in the developed world and evidence shows that this is bad for almost everyone. Income inequality is the extent to which income is distributed unevenly in a group of people.    Income Income is not just the money received through pay, but all the money received from employment (wages, salaries, bonuses etc.), investments, such as interest on savings accounts and dividends from shares of stock, savings, state benefits, pensions (state, personal, company) and rent. Measurement of income can be on an individual or household basis – the incomes of all the people sharing a particular household.   Household income before tax that includes money received from the social security system is known as gross income. Household income including all taxes and benefits is known as net income1. 2. Pay inequality A person’s pay is different to their income. Pay refers to payment from employment only.  This can be on an hourly, monthly or annual basis, is typically paid weekly or monthly and may also include bonuses.   Pay inequality therefore describes the difference between people’s pay and this may be within one company or across all pay received in the UK. 3. Wealth inequality Wealth refers to the total amount of assets of an individual or household. This may include financial assets, such as bonds and stocks, property and private pension rights.   Wealth inequality therefore refers to the unequal distribution of assets in a group of people. How is Economic Inequality Measured? There are various ways of measuring economic inequality.  The choice of measure does not change what inequality looks like dramatically2.  However, changes in inequality over time within individual countries can look different if different measures are used3,4. Commonly used measures of economic inequality 1. Gini coefficient The Gini coefficient measures inequality across the whole of society rather than simply comparing different income groups.  If all the income went to a single person (maximum inequality) and everyone else got nothing, the Gini coefficient would be equal to 1.  If income was shared equally, and everyone got exactly the same, the Gini would equal 0.  The lower the Gini value, the more equal a society.  Most OECD countries have a coefficient lower than 0.32 with the lowest being 0.24.  The UK, a fairly unequal society, scores 0.34 and the US, an even more unequal society, 0.38. In contrast, Denmark, a much more equal society, scores 0.255.  The Gini coefficient can measure inequality before or after tax and before or after housing costs. The Gini will change depending on what is measured. This is the most commonly used and most reliable measure of inequality in use today and as you have stated that 'nothing seems to have changed' the actual figures show otherwise. The level of inequality in the UK has been riding steadily since the nineties and, the last four years have seen the the highest rises in inequality since records began. Poverty, and especially child poverty have undergone increases not seen since the war and post war periods in the past four years. I agree with you that union bosses salaries are way too high but, that has nothing at all to do with income inequality and poverty. Perhaps pointing out to them what is actually going on might have some influence on their willingness to accept such large salaries. karlmarx
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