What are the facts?
The wealth gap is something which is not new but hopefully will eventually be a thing of the past. Currently we are far from this. According to the ONS (Office for National Statistics) in the financial year ending 2020, the income of the richest 20% of people was over six times higher than the poorest 20%, while the richest 10% received 50% more income than the poorest 40%.
These facts are shocking and the UK has one of the highest levels of inequality in the developed world. There are several factors that may have contributed to increased inequality in the UK in recent years including; an increase in the number of people on benefits. There has been an increasing number of people on state benefits such as sickness and incapacity benefits, but due to the COVID-19 pandemic there has also been a rise of unemployment.
What does this mean?
The costs of the pandemic are being borne disproportionately by poorer segments of society, because low-income populations are more exposed to the health risks, meaning more time required off work and therefore more likely to experience job losses. The low-income populations, excluding key workers, tend to work in sectors that have been forced to shut down, and 80% are either in a shut-down sector or are unlikely to be able to do their job from home, which of course has a significant impact on their income and assets. Whereas, only a quarter of the highest-earning tenth, work in shut-down sectors, as most of the highest-earning population are still able to work from home and in fact may have reduced the expenses for their business, which potentially means, due to the saved costs, workers may have a pay increase or bonus, which will only increase the income gap and the wealth gap further.
Jargon Buster Glossary
Income gap: refers to the gap in earnings between two groups.
Wealth gap: looks at assets and net worth (assets minus debts), rather than looking at just income.
By Victoria Wilson, LLB Law, Keele University.
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Sources: https://www.ons.gov.uk/peoplepopulationandcommunity/personalandhouseholdfinances/incomeandwealth/bulletins/householdincomeinequalityfinancial/financialyearending2020provisional#main-points & https://www.economicshelp.org/blog/310/economics/rising-inequality-in-the-uk/#:~:text=Income%20inequality%20of%20top%201%25&text=Growth%20of%20financial%20sector%20and,rise%20in%20long%2Dterm%20unemployment https://www.ifs.org.uk/publications/14879