According to the OECD, “the income of the richest 10% of people around 2008 was, on average, nearly nine times that of the poorest.” The inequality of incomes across the developed and developing world is a concern for the OECD, especially given the possible impact of the crisis on levels of inequality.

The OECD Policy Forum held on 2 May in Paris provided an opportunity for the researchers, Ministers and representatives of the civil society to discuss the trend of high and increasing income inequality in many OECD countries and emerging economies and the way forward to a better sharing of the benefits of globalisation. The issues paper accompanying the Policy Forum reveals the huge differences in inequality across the countries in 2008, just before the crisis (See figure 1).

Angel Gurría, Secretary-General of the OECD expressed concern about how countries will rebound after the crisis, worrying that the recovery may not restore the low-skilled jobs that were lost and calling the dramatic impact on youth unemployment “the tragedy within the tragedy” of the crisis.

Richard Freeman, Professor of Economics at Harvard University in the USA, noted that inequality between countries worldwide was falling due to growth in developing economies but increasing within most countries. He cautioned against general assumptions about the drivers of inequality, saying that factors such as knowledge transfers, technology and globalisation have different effects depending on the context. Professor Freeman noted the huge income gains among the top 0.1% of earners, large enough to have an overall impact on inequality. Among the consequences of inequality, he highlighted, were the prevalence of mental health problems and a deterioration of social cohesion.

Ministers from Australia and Austria talked about their countries’ experiences of tackling inequality. Jenny Macklin, Australia’s Minister for Families, Housing, Community Services and Indigenous Affairs, remarked on increasing rates of child neglect and abuse since the crisis and the need to help some families with basic financial management. Mr. Rudolf Hundstorfer, Minister of Social Affairs and Consumer Protection of Austria stressed that his government’s response to the crisis had sought to mitigate its impact on lower-income groups: “Minimum pensions, low unemployment benefits and social assistance benefits were increased. We did not think it would be fair to additionally burden people who suffered most from the effects of the crisis.”

This was a Forum with a very broad scope, mainly looking at the drivers and consequences of inequality. The OECD’s accompanying issues paper highlighted the important role of cash transfers and public services alike in the policy mix to tackle inequality. According to the OECD, “cash transfers and income taxes reduce inequality by one third and reduce poverty by about 60% (...) The redistributive effect of public services in OECD countries is, on average, two-thirds of the impact of taxes and transfers.” (From the OECD issues paper)