15.05.13
Reducing welfare system ‘danger’ – OECD
Income inequality in the UK increased by more in the first three years of the economic crisis than in the previous 12 years, new data from the Organisation for European Economic Co-operation (OECD) shows.
The report covered 34 developed nations, and found that in the UK the “pain of the crisis was not evenly shared”. The OECD warns that cutting the welfare system now would plunge many more into poverty.
Young adults were most affected by the recession, with an additional 4% of 18-25 year olds pushed into poverty between 2007 and 2010. In 2010, disposable income of the top 10% of UK’s households was on average £53,600 a year, ten times higher than the bottom tenth, on an average of £5,300.
Michael Forster, senior analyst at OECD, said: “The welfare state has cushioned the blow for many but more social spending cuts in OECD countries, including the United Kingdom, may increase the risk of greater inequality and poverty in the years ahead. We can show that between 2007 and 2010 in most countries, including Britain, the welfare state was working: that’s the good news. The bad news is that if you reduce the welfare system too much there might be a danger for poorer population groups.
“The first few years of the crisis were the easier ones, because the welfare system cushioned the effects. But now these welfare systems are under challenge. As the crisis lingers on there’s no sustainable growth and it’s very important to design reforms that do not put pressure on poorer people.”
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