CAUSES AND SOLUTIONS OF INCOME IMBALANCE IN UK 6
CAUSESAND SOLUTIONS OF INCOME IMBALANCE IN UK
Inthe recent past, the income difference wealth distribution in the UKhas become significantly high. According Firebaugh (2003, P. 23),10 %of the poorest people in the UK earn 2.5 %of the kingdoms average income. On the other hand, 10 %of the richest group earns 35 %of the country’s total income. This essay will outline major causesof income inequality in the UK, as well as strategies that can helpto attain more equal income distribution.
Inheritanceis one of the major factors that have contributed significantly tothe to the income difference in the UK. The many rich families havefamily inheritance such as real estates, land, and residentialhouses. On the other hand, immigrants and minorities, spend a largeshare of income paying mortgages or purchasing other assets that havesignificantly reduced the average of this income group (Jenkins 2011,p. 38).
Theadoption of advanced technology in the United States has alsocontributed significantly in unequal wealth distribution. Accordingto Petit and Soete (200, p. 15), increased adoption of advancedtechnology in the European market has consistently displaced the lowskills and middle-level jobs. This implies that several low-skilledemployees have lost income. On the contrary, the reduced number ofemployees implies that businesses are generating higher income.Entrepreneurs become richer, thus they have higher allowances, aswell as they can remunerate their staff more while the low skilledemployees continue becoming poorer (Brenner et al. 1990, p. 26).
Assortativemating has become more widespread in the UK than ever before. Thewealthy families ensure their children marry from another family ofsimilar status. As a result, the wealthy families have remainedwealthy while the poor families remain poor (Jenkins 2011, p. 38).
Thedecreased share of national income allocated to the labour sector hasalso led to the increased inequality. The high income earners wageshave increased by a higher rate than the low income earners. Inaddition, wealthy persons have capital for investing in lucrativeindustries, that remunerate employees poorly (Brenner et al. 1990, p.19).
Lastly,the political capture has increased unequal distribution ofresources. The wealthy persons are either able to manoeuvre their wayinto high political positions or they sponsor preferred candidateswho in turn pass regulations that favour the wealthy. The wealthy canacquire the loyalty of policymakers through monopolisation ofdiscourse, campaign contributions and lobbying. The regulatory bodyin turn creates weakened social safe nets, deregulation, and otherloopholes the favour the affluent to generate higher income than thepoor (Ault & Arnold 2010. P. 55).
TheUK can achieve equal wealth distribution through increasing thenational minimum wage in the kingdom. In addition, the country shouldalso create stricter policies that should ensure that the high andlow income wages should increase or decrease at the same rate.Second, the tax credit for the working families should be paidthrough tax system in the form of a reduction instead of the presentcash welfare system (Jenkins 2011, p. 38). Third, increasing theactual value children benefit, as well as introducing the Children’sTax Credit can also help to reduce income inequality. Fourth, thegovernment should offer financial support to major workers in the UKso that they can acquire a mortgage for purchasing house. This way,the low income employees, can convert the rent into assets. Theassets are crucial for reducing wealth distribution between thewealthy and the poor (Petit & Soete 2000, p. 41). Fifth, thegovernment should extend the childcare programmes that would in turnenable low income mothers to join the active workforce.
FIREBAUGH,G. (2003). Thenew geography of global income inequality.Cambridge, Mass, Harvard University Press.http://site.ebrary.com/id/10326145.
PETIT,P., & SOETE, L. (2001). Technologyand the future of European employment.Cheltenham, UK, E. Elgar.
BRENNER,Y. S., KAELBLE, H., & THOMAS, M. (1990). Incomedistribution in historical perspective.Cambridge [England], Cambridge University Press.
AULT,H. J., & ARNOLD, B. J. (2010). Comparativeincome taxation a structural analysis.S.l, Kluwer Law International.
JENKINS,S.P. (2011). Changing Fortunes:Income Mobility and Poverty Dynamics in Britain.Oxford University Press.