Soc inequality - Reasons why income/wealth inequality exists Flashcards
Factors
Low pay, the gender pay gap, unemployment, educational attainment
LOA
This essay will provide the evidence to show that they are all contributory factors leading to what is being seen as the widening gap between the rich and poor in this country
Low pay
Low pay is seen as a cause of income and wealth inequality in the UK. The UK has a National Minimum Wage for those aged up to 23 and a National Living wage for those aged over 23. The NLW pays £10.42 per hour, giving workers an annual salary of £18,900. However, child poverty action group identified a 2022 Uk income of £18,700 as the minimum to avoid living in poverty, highlighting how close many families may live to the breadline. Furthermore, many low paid workers are employed on zero-hour contracts. Zero hour contracts provide no set hours per week and are very common in sectors such as retail. For example, there are currently 1.18m workers in the Uk on zero hour contracts. These contracts can cause financial insecurity as employers may not require labour from one week to the next, meaning no guaranteed level of income for those employed on the contracts and can affect loans, mortgages, credit checks etc. Therefore, it is clear the NMW and NLW are inadequate and do not tackle the issue of low pay, as many workers weekly hours are too low for this to have an impact; meaning low pay remains one of the most significant causes of income and wealth.
Gender pay gap
The gender pay gap is seen as a cause of income and wealth inequality in the UK. Many women are more likely to work in low paid, insecure work compared to their male counterparts who tend to make up most highly paid jobs. For example, pilots are almost exclusively men, while women work as cabin crew. According to the BBC, Airlines Easyjet, TUI, Thomson and Jet2 all have pay gaps of atleast 45%. This demonstrates that traditional male occupations are often higher paid than traditional female occupations leading to a continued gender pay gap and income inequality. Furthermore, women disproportionately face the impact of part time working patters compared to men. Women often drop to part time hours to facilitate child care for significant periods in their careers. For example, in the UK there is a gender pay gap of 17.9% between full time and part time workers. This highlights that although women often outperform men in educational attainment, this does not always translate to financial security; with women significantly more likely to have childcare commitments affecting income. Clearly there is considerable work to be done by UK governments. Despite decades of government action, it is clear that the gender pay gap is still a significant factor in leading to income based inequality in the UK.
Unemployment
Unemployment is seen as a cause of income and wealth inequality in the UK. Unemployed people face massive income shortages, affecting their ability to remain above the poverty line in life. For example, 50% of households experiencing unemployment live in poverty, compared to 10% of households where full-time employment exists. This highlights the crucial role that steady employment can have in helping families to remain above the poverty line and underlines the danger unemployment poses. Furthermore, those who are unemployed and dependant on state benefits are increasingly more exposed to poverty if benefits are cut. Benefits, generally, have been cut in the UK since the 2010 conservative-Lib-Dem coalition. The New Economics Foundation found that 20% of the poorest households are £750 (6%) per year worse of than in 2010. This outlines that the rate of poverty has increased for those dependant on state benefits, amplified by £14bn having been taken out of the welfare system since 2010. Overall, the link between unemployment and wealth inequality is clear, with it being evident that sustained cuts to the welfare system combined with stubborn unemployment levels, dramatically increase the likelihood of families experiencing unemployment and becoming socially excluded.
Educational attainment
Educational attainment is seen as a cause of income and wealth inequality in the UK. In the UK there is a clear attainment gap between young people from the most privileged backgrounds, compared to those from the least. For example, the average higher pass rate in Scottish private schools is 91% compared to Scottish state schools where it is 77%. This highlights how young people from poorer backgrounds are at a huge disadvantage as they often do not benefits from up-to-date materials and tuition. Furthermore, although the Scottish government removed tuition fees, those from poorer backgrounds are still less likely to go to university. The cost of living crisis has had a disproportionate impact on the university aspirations of many young people from poorer backgrounds in the UK. The Times reported in september 2023 that those from more affluent backgrounds could be as much as twice as likely to go to university vs poorer students, with the gap widening. The fact that graduates financially outperform non-graduates by £12k a year highlights the significant impact a lack of educational attainment can have on someone’s financial prospects in later life. Overall, the disparity between graduates and non-graduates is matched by another significant earning gap between typical and elite universities, highlighting how education plays a massive role in income inequality in the UK.
Conclusion
In conclusion, there is no one significant factor causing income and wealth inequalities. The creation of income and wealth inequality is a complex issue and all factors identified have had a role to play.
