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Learning Objectives
- To name and explain some global trends in social inequality.
- To explain the meaning of Gini index (or coefficient) scores.
- To identify specific ways other countries have addressed social inequality.
- To compare international approaches to education, early childhood education, housing, and healthcare.
- To make connections between global levels of inequality and life in Canada and vice versa.
Summary
Introduction
We use the Gini index (or coefficient) to measure and compare inequality. It expresses income inequality on a scale of 0 to 1, with 1 being perfect inequality and 0 being perfect equality. Inequality is a growing concern worldwide and is made worse by social forces that extend beyond national borders, including nuclear spread, biodiversity loss, and the climate crisis. However, inequality is something we can correct, or at least adjust, through social legislation.
Basic Facts about Global Inequality: The Poor
The most rapid population growth happens in the world’s poorest countries, partly because women don’t have access to education, effective and safe birth control, or a living wage. Conversely, in the developed world women usually have fewer children the more education they get, the more time they spend in the paid labour force, and the higher income they earn.
In 2016, almost 10 per cent of the world’s workers and their families lived on less than US$1.90 per person per day. This is considered extreme poverty. One in 10 people in the world is chronically malnourished, and one in six children under the age of five is underweight. It is common for people living in extreme poverty to die of preventable, treatable diseases like tuberculosis, cholera, polio, measles, and malaria. Children, mostly babies, die in developing countries much more often than in wealthier countries. People in developing countries also feel the effects of the climate crisis first and most severely.
In many countries, families are expected to pay tuition for their children, even in primary school. In the poorest countries, these expenses, combined with ingrained patriarchal beliefs, mean that girls have less than a 50 per cent chance of completing primary school. Women are also much less likely to participate in change making at the highest levels of government. In a 2018 global analysis, the rate of women’s representation in parliament was only 24 per cent.
The number of people living in extreme poverty is shrinking, but we are seeing an increase in the gap between the rich and the poor in both developed and developing countries.
Basic Facts about Global Inequality: The Rich
According to the OECD, “income inequality in OECD countries is at its highest level for the past half century. The average income of the richest 10% of the population is about nine times that of the poorest 10% across the OECD, up from seven times 25 years ago” (OECD 2019a). However, there are big differences from country to country. In some Nordic countries, the richest slice of the population is only about five times richer than the poorest. In Mexico and Chile, the richest slice of the population is 27 times richer than the poorest. Similarly, large emerging economies like China and India show higher (and growing) inequality. Using the Gini index, Canada sits near the middle of OECD countries. On a global scale, fewer people are controlling the world’s wealth: today, half of the world’s wealth is owned by only 1 per cent of the population.
Why Is Higher Inequality Happening?
Globalization has produced conditions that hasten the concentration of wealth. International organizations like the World Bank and the IMF coordinate large-scale lending and borrowing between countries. Historically, some of these loans have come with strings attached and required borrowing countries to “shrink” their governments to reduce their fiscal imbalances. To qualify for a loan, a government might be obliged to sell publicly owned assets to private (and often foreign) buyers. This privatization of public assets means that money that might otherwise stay within a country is sent to bank accounts elsewhere. And even if profits were earned by a resident of the country, these people could dodge paying domestic taxes on this income by banking in tax havens like Switzerland or the Cayman Islands.
Wealth often accompanies power. This means the wealthiest can influence politicians to bend or create laws to favour them (e.g., labour laws). Meanwhile, technological change often privileges higher-skilled workers and limits opportunities for the unskilled. Often, unskilled workers in emerging economies end up in manufacturing. To attract big factories, many emerging economies will relax employment rules. This has resulted in high employment rates in poor communities. However, workers receive low wages and few or no health benefits, and they are often employed part time or on short-term contracts. This strategy is sometimes known as a race to the bottom, and it makes the poorest even more vulnerable.
Another driving force of inequality is the change in household structure. Today, there are far more single-headed households around the world, which lessens the concentration of wealth. A second trend that has influenced wealth concentration is the increased tendency to marry within one’s income bracket, known as assortative mating.
Different Actions to Combat Inequality
The Nordic countries – Norway, Sweden, Denmark, Finland, and Iceland – are among the most equal in the world. They have achieved this by adopting a “social democratic welfare regime,” a set of social and political institutions that cover almost every aspect of daily life and seek to redistribute wealth and power. They also seek to reduce suffering and raise the most vulnerable members of society socially and economically. This regime took decades to develop and required dedicated political leadership, a strong political mandate, and strong public support. However, these countries are imperfect. In comparative terms, they excel at promoting income and gender equality but have a way to go in promoting equal citizenship for ethnic and racial minorities.
Income from Employment
Many Canadians struggle to find safe, stable, and reasonably paid work. One of the major reasons behind this inequality is employment discrimination. Certain populations in Canada also have unequal access to key employment prerequisites like education or training.
The “common sense” perspective suggests that those who work harder are paid more, while the functional theory of stratification proposes that income inequality exists to encourage people to seek more challenging and socially valuable occupations. The ethnicity model states that if immigrants cannot secure work, it is because they have yet to conform to the Canadian work environment. Conversely, the equity model is part of conflict theory and claims that institutional barriers cause employment inequality – the workplace itself is designed to promote the interests of those at the top, not those at the bottom.
In the United States, which has the fourth-highest level of inequality of all OECD member-states, income inequality has risen sharply since the 1980s. The average pay of the top American CEOs is 312 times as much as an average worker’s, while in Canada, CEOs earn 209 times as much as the average worker. Racialized people in both Canada and the United States report discrimination in the workplace. One notable period of employment discrimination based on race or ethnicity emerged after the 9/11 attacks in 2001. Scholars have also studied American employment discrimination patterns on grounds of gender identity, sex, class, age, and weight.
Conversely, Sweden is considered one of the most equitable economies. University is state-funded through taxes in Sweden. Swedish citizens also have broader access to quality low-cost or free early childhood education and job search and training services. For decades, Sweden has focused on promoting higher labour participation rates for women through parental leave policies that seek to equalize parenting responsibilities. In the 2000s, Sweden also decreased the number of years of residency needed to apply for citizenship, reduced the waiting period for citizenship, abolished the language skill test, and recognized dual citizenship. These changes made it easier for immigrants to gain citizenship and thus safe and secure employment.
Housing and Transportation
We can see different national approaches to housing characterized by various types of housing taxation, land use, and rental rules. Social housing is one common strategy that addresses housing inequality. Social housing makes up 5 per cent of total housing stock in Korea, Norway, Switzerland, Australia, and Italy; around 20 per cent in Denmark, the Netherlands, and Austria; and roughly 10 per cent in Canada. Depending on the approach, social housing can worsen residential segregation. This tendency is most common in a targeted social housing system, which prioritizes those who display the most financial need. Germany has taken a creative spin on social housing with its house rental-sharing program. A senior or person with a disability who has a spare room is matched with a “homesharer” who needs affordable accommodation and is able to help out with the house. Another kind of German house sharing happens between elders and young children. The Mehrgenerationenhäuser combines the nursery and the sitting room, creating both a kindergarten as well as a social centre for the elderly and young children.
Daycare and Early Childhood Education
Canada is one of just a few First World economies without a national program that offers quality, low-cost public childcare. Countries where childcare is publicly delivered perform better on benchmark rankings, and participation is higher. In Norway, parents can take up to 49 weeks of paid parental leave or 59 weeks at 80 per cent of their salary. Fifteen weeks of this is earmarked for the second parent. Centre-based, preschool childcare is provided for all children aged 1–5 who need it, and fees for this care are heavily subsidized. The control of these centres is the authority of the local town, giving the centres the ability to respond to local needs, such as culturally suitable care for Indigenous Sami children. Teachers must be specifically trained with at least a university degree, and childcare centres encourage parental involvement whenever suitable. As of 2015, Norway scores above the United States in science, reading, and math, and children show a greater sense of belonging and lower school-related anxiety.
Postsecondary Education
In Canada, youth from lower-income families are less likely to seek postsecondary education. Older students, students with disabilities, racialized students, new immigrant students, Indigenous students, and LGBTQ+ students also face barriers to education in Canada. Another country that shares Canada’s low postsecondary participation ranking is the United States. US tuition rates are among the highest in all the OECD countries. This severely limits aspiring students from low-income families. In recent years, the United States has experienced a problem called educational undermatching. Undermatching occurs when a talented student from a low-income family does not apply to Ivy League colleges like Harvard, Princeton, or Yale. This may be in part because low-income high achievers attend high schools where they are not likely to meet teachers, guidance counsellors, or older students who attended an Ivy League school, so they are less likely to imagine these schools as a possibility. Meanwhile, Norway, Sweden, Finland, and most recently Germany have scrapped tuition fees for postsecondary education. The cost of offering postsecondary education is borne by the taxpayers, but there are public returns on having an educated population, including greater social contributions and tax revenues.
Healthcare
Typically, Canadians are proud of our universal healthcare system. Canadians typically wait longer to see doctors when compared to other publicly funded healthcare systems. When we do get to see a doctor, however, we report higher-than-average satisfaction with the care we receive.
Around the world, poverty and poor health go together. Inequality is another contributing factor to poor health: citizens in countries that are economically comparable may fare better or worse depending on the distance between the poorest and the richest. Globally, Sweden is considered a leader in preventive healthcare practices and policies. Better healthcare and equality of access to healthcare is a formal goal and principle of its health policies. Also important is its decentralized health system: County (regional) councils can make decisions about work arrangements that best address their needs. This flexible and innovative model allows for better-funded and specialized hospitals and more personalized patient care. Sweden also collects data on diagnoses, treatment, and effects of diseases gathered from complete records of every case. This data is shared and used to grow knowledge about illness and healthcare delivery. Another example of a country that has seen improvements in overall health by improving access to basic needs is Finland. Evidence shows that good health in the first months of life pays off over a lifetime, and the government of Finland sends all expectant mothers a Finnish Maternity Package filled with just about everything a new baby needs.
Equality, Prosperity, and Happiness
Research on happiness has consistently shown that certain specifiable conditions make people happy. These include a secure and sufficient income, good health, a family household, a safe neighbourhood, a source of meaning, and the feeling of belonging to a community. Canada usually scores in the top 10 happiest countries in the world. However, people in Nordic countries – Finland, Norway, Denmark, Iceland, and Sweden – are even happier than people in Canada.
It seems the Nordic countries have found happiness by lessening inequality through a social democratic welfare regime. There is a clear negative correlation between the average happiness of a country’s citizens and its income inequality. As well, income equality generally accompanies other civil rights, broad protections of human dignity, progressive social programs, anti-discrimination laws, and social welfare achieved through taxation and wealth redistribution. The relative prosperity of Nordic countries allows their governments to spend lavishly on health, education, safety, and infrastructure. The Nordic model is very decentralized, with many protections for families and workers. Another critical factor in the success of Nordic countries is good governance, which includes political stability, control of corruption, the rule of law, and regulatory quality. The Nordic welfare state embraces three broad policies: a large investment in health and education, universal transfer payments for social security, and a strong commitment to full employment and job retraining programs.
Could Canada become more like the Nordic countries? Canada may be hampered by four main factors: its large geographic size, its large population, its high degree of cultural diversity, and its high rates of immigration. We may find that it is easier to promote co-operation, consensus, and sharing in a small, homogeneous, fairly static society (like Norway) than in a large, diverse, and rapidly changing society (like Canada).
Unlike many industrial societies that claim to promote equality of opportunity, the Nordic countries promote equality of condition. The Nordic concern with equality of condition promotes the development of social justice in both politics and daily social life. Equality legislation has a long history in Nordic countries, beginning with gender equality legislation in the 1970s. Corporatism, which combines a capitalist economy with extensive state control and trade union involvement, is critical for Nordic politics. All the Nordic countries are prosperous by any standard we might apply, and the Nordic model is a benchmark for the international promotion of gender equality. However, with increasing numbers of immigrants, the Nordic countries face a new challenge to equality: The problem of addressing interlocking disadvantages in the face of rapidly rising ethnic, racial, religious, and linguistic diversity. There has been a relative exclusion of diverse ethnic minorities in the labour market, politics, and society, and increasing tensions between the dominant group and minority groups.