Despite strong economic growth that produced millions of new jobs since the early 1990s, income inequality grew dramatically in most regions of the world and is expected to increase due to the current global financial crisis, according to a new study published today by the research arm of the International Labour Organization (ILO).
The new report, entitled World of Work Report 2008: Income inequalities in the age of financial globalization (Note 1), produced by the ILO’s International Institute for Labour Studies also notes that a major share of the cost of the financial and economic crisis will be borne by hundreds of millions of people who haven’t shared in the benefits of recent growth.
“This report shows conclusively that the gap between richer and poorer households widened since the 1990s”, said Raymond Torres, Director of the Institute responsible for the report. “This reflects the impact of financial globalization and a weaker ability of domestic policies to enhance the income position of the middle class and low-income groups. The present global financial crisis is bound to make matters worse unless long-term structural reforms are adopted.”
The report notes that while a certain degree of income inequality is useful in rewarding effort, talent and innovation, huge differences can be counter-productive and damaging for most economies, adding that “rising income inequality represents a danger to the social fabric as well as economic efficiency when it becomes excessive”.
See full Press release.
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