By Judith Ugwumadu | 3 July 2014
Wage inequity is expected to rise and global growth is projected to slow between now and 2060, according to the Organisation for Economic Co-operation and Development.
Its Policy challenges for the next 50 years report stated that over the next 50 years that global growth is set to slow from 3.6% in 2010/20 to 2.4% in 2050/60, because of ageing populations and a gradual deceleration in emerging economies.
‘The global economic balance will continue to shift towards the current non-OECD area, which will have an economic structure and exports increasingly similar to those of the OECD,’ the report said.
‘With technical progress raising the global demand for high-skilled workers, by 2060 average market earnings inequality (before tax and transfers) in the OECD area will reach the level of today’s most unequal OECD countries.’
The report pointed out that sustaining growth while addressing rising inequality would be a major policy challenge.
‘The widening inequalities would require effective redistributive policies, a strong focus on equality of opportunity and a review of the funding systems of public services and of tax structures.’
The think-tank argued that there was a need for a robust redistribution of policies and a review of the funding system of public services, as well as of tax structures to reduce the widening inequalities.
It suggests a focus on public funding on basic and pre-university education and lifelong learning, where some of the largest social benefits can be reaped not least in terms of equality of opportunities.
The OECD also stated that ‘shrinking income gaps between advanced and emerging economies will lower incentives for economic migration into advanced countries’, and this fall in immigration would add to demographic pressures.
‘This double pressure could reduce the labour force compared with the baseline of current trends by 20% in US and by 15% in the Euro area by 2060.’
Faced with such challenges policy-makers should make the labour and products market more dynamic and sustain innovation, productivity and employment, the OECD suggested.
