Increasing income gap 'due to poor education'

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5 Dec, 2011 Updated Mon 5 Dec 2011 15:03 CEST
Increasing income gap 'due to poor education'

The gap between rich and poor in Germany is widening dramatically, a new OECD report says, warning that investment in education and training were key to fighting inequality.


The latest report from the Organisation for Economic Co-operation and Development (OECD) showed the top 10 percent of working-age Germans earned about eight times as much as the bottom 10 percent.

The highest-earners had an average annual income of €57,300, while the lowest-earners managed just €7,400, the report said.

During the 1990s, the income gap was just six to one, the report said.

This widening difference between Germany’s wealthiest and its poorest put the current Teutonic income gap alongside that in other OECD countries such as Canada, Belgium and Australia. Germany still has some way to go to reach the wealth gap of the US, where the top 10 percent makes 15 times more than the bottom 10 percent.

A range of factors contribute to the widening income gap, including the share of part-time workers increasing from 11 to 22 percent of the workforce between 1984 and today, the report said.

Societal changes are also driving the trend - there are more single parent households, people living alone and people marrying in similar earnings classes, all of which keep income levels down, the report said.

Increased income levels among women have helped to mitigate the effects of these social changes somewhat, the report said.

Wide income disparities are considered damaging to social cohesion with some studies showing that crime rates can be higher in economically unbalanced societies like the United States.

The OECD said better employment that gives people a chance to escape poverty, improved educational systems and reformed tax and benefits schemes were key to tackling income inequality.

It also argued for the importance of free public services such as education and healthcare.

“There is nothing inevitable about high and growing inequalities,” said OECD Secretary-General Angel Gurría in a statement.

“Our report clearly indicates that up-skilling the workforce is by far the most powerful instrument to counter rising income inequality. The investment in people must begin in early childhood and be followed through into formal education and work.”

The Local/mdm


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