Economic Inequality in Australia - Essay Example

ECONOMIC INEQUALITY IN AUSTRALIA Name: Instructor: Course: Institution: Date: Question 4: Increase in Economic Inequality in Australia Economic inequality is a reality in Australia amidst a focus on egalitarianism. While the levels of inequality are below those of the United States of America and the United Kingdom, the fact is that Australia is headed into the same pitfall (Australian Council of Social Services, ACOSS, 2015). Britain, United States and Australia are among the countries in which economic inequality has risen at an alarming rate for the last 20 to 30 years (Griffiths, 2011). During the times when Australia experienced a stable economic coexistence, there are various institutions that enhanced the equilibrium in income and wealth generation and distribution. Such institutions were founded on a number of aspects such as full employment, progressive income taxes, a unique wage regulation system, and equal access to public education, among others. These aspects shaped the Australian economic status by ensuring “relatively low taxes and public expenditures, and a flexible labour market” (ACOSS, 2015, p.8). This task delves into the causes of economic inequality in Australia since the 1970s and the effect of this inequality on the quality of life. The aim is to explore the factors that have caused a change in the stability of this nation and shed light on the repercussions associated with the experiences of the inhabitants in connection with economic inequality. The task relies on a review of available literature to come up with a conclusive evidence of the two aspects: economic inequality and quality of life in Australia. Causes of Economic Inequality in Australia Income Inequality Income is a common measure of an individual’s or household’s economic stability and well-being. Scholars have investigated the impact of downgrading and upgrading on the income distribution. Downgrading refers to an experience of lower incomes among the poorer population while upgrading entails relatively higher incomes for the richer population. Research depicts that polarisation is to blame for massive income inequality rather than a consideration of downgrading or upgrading in isolation (Griffiths, 2011). However, where massive economic inequality is experienced, upgrading is more a factor than downgrading. ACOSS reports this scenario in connection with the economic status of Australia. People at the top of the ladder, as far as income distribution is concerned, have five times more income than those at the bottom. An individual at the top 20% has 70 times more wealth than a person at the bottom 20% (ACOSS, 2015). Over the last two decades, the income share of the top 20% populations has increased while those at the bottom and middle levels experience a decrease. While wealth has increased for both groups, those at the top report a 28% increment while the percentage increase in income for those at the bottom is only three (ACOSS, 2015). Polarisation is, therefore, evident in the case of Australia in connection with income and wealth distribution and eventual economic inequality. Globalisation is a key element of consideration in economic inequality discussions, especially in developed nations (Conley, n.d.). Proponents of this assertion argue that globalisation is a driver of change that denies the government a chance to redistribute the outcomes of economic growth in a way that would ensure equity. Government’s regulation in driving a country’s progress is no longer the norm of the contemporary society. Opponents suggest a need to deviate from globalisation and instead encourage open-mindedness in fighting economic inequality. Worth noting is the fact that globalisation gets a consideration in every aspect of life and influences a wide range of trends nationally and internationally. It is widely blamed for the underdevelopment of nations and also praised for the development of others. Populations experience the effects of it in association with policy making. Globalisation is widely mentioned as a justification for the limitation of the government’s role in Australia and elsewhere (Conley, n.d.). ACOSS (2015) posits that the equal distribution of the outcomes of economic growth experienced in the past is no longer practised in the contemporary context. Policy-making has affected various aspects of economic stability such that the rich get richer while the poor get poorer in a competitive economy. For instance, Australia experienced eight consecutive tax cuts on income during the 2000s era. Before that occurrence, the tax was charged progressively and this meant that higher income earners paid more than low-income earners, a factor that enhanced equitable distribution of market outcomes. With the tax cuts, however, the benefits went to the higher income earners though most households paid less tax. Employment is one of the aspects that enable individuals and households to earn a constant income. Globalisation has impacted educational and skills attainment in most global populations. This has led to the emergence of a specialised group of skilled workers that distinct itself from the group of persons with less or no skills. Eventually, it emerges that the market outcomes are highly founded on the level of skills depicted by an individual such that there are skilled workers, in which case professionals and experts gain a top class. In connection with this phenomenon, there is high demand for skilled labour amidst the adoption of highly mechanised systems in production. The contemporary workplaces consider one’s educational levels and experience in their search for prospective employees. These elements are just basic and are then followed with various tests in a bid to gauge one’s level of skills in a specific profession (Griffith, 2011). People with a higher education and level of skills are more privileged than those with lower or no education and skills. The incomes of such individuals are relatively higher, a factor that worsens the inequality levels. Again, there is a growing trend in today’s industries where skilled workers are prioritised and offered more work hours and more wage per hour than the unskilled. Those whose skills are in high demand also get similar privileges. Unfortunately, women tend to fall into the category of people whose skills are on low demand, a factor to blame for gender inequality in income distribution (ACOSS, 2015). Wealth Inequality The notion of wealth inequality is also crucial to the income inequality phenomenon. In Australia, there is a wide gap between top 10% and the bottom 10% as far as wealth possessions are concerned. 45% of the nation’s wealth is concentrated with the top 10%. Wealth enhances income by increasing the chances for further education and well-paying jobs as one can obtain income from the assets he or she owns. One may also use his or her assets as security for financial assistance and this ensures maintenance of one’s living standards even when the income obtained from employment is insufficient (ACOSS, 2015). Housing emerges as the most evenly distributed wealth as most people with relatively lower incomes, particularly the retirees and those nearing retirement, have a home. However, it is proving difficult for the youth, aged between 25 and 44 years, to acquire a home due to the high costs involved (ACOSS, 2015). This depicts a changing trend where home ownership will be a reserve of the wealthiest in Australia just like other elements of wealth. Wealth inequality decreased moderately after the Global Financial Crisis. However, if the past two decades are to go by, an increase in the value of monetary assets will continue to escalate wealth inequality in Australia (ACOSS, 2015). Consequences of Economic Inequality Increase for the Quality of Life in Australia Economic inequality affects the daily lives of a nation’s citizens in various ways. People with high levels of economic stability enjoy a high-quality life as they have access to most, if not all, goods and services that make life comfortable. Based on the level of wealth, one can use an asset(s) to gain more cash where the income from employment is insufficient (ACOSS, 2015). Economic inequality leads to stratification of the population to fit a specific social class. Where one is stable economically, stratification defines him or her as one of a high social class. Economic instability places one in the low social class category. Graham (2004) suggests three critical factors that determine an individual’s economic well-being and social status: education, income, and career. A review of the literature undertaken herein depicts the three elements as the pathways to economic stability. High living standards are at the core of persons with high educational levels, a good job, and high income. Such people live in good housing conditions and own a range of assets as per one’s wish (Graham, 2004). The uneducated are either in low-paying jobs or none at all. Asset ownership is a difficult endeavour to them. Access to crucial services is also limited by their incapacity to pay for such services. Their lives are miserable and stressful. Economic inequality is also a factor of consideration in relation to a person’s health status. Pickett and Wilkinson (2014) report a correlation between economic instability and ill health. Nations with higher levels of economic inequality experience more health-related cases than those with lower levels. The effects of economic instability are evident from early stages in life. People with lower incomes, for instance, experience several instances of malnutrition. With malnutrition comes vulnerability to various diseases. The life expectancy of such individuals is, therefore, low. Their situation is worsened by engagement in life-threatening behaviours, such as smoking and suicidal tendencies (Steinbach, 2009). Poverty is a factor in various life experiences, such as violence, imprisonment, teenage pregnancies, high infant mortality rates, and low life expectancy. While initial research focused on the relationship between health and societal inequalities, there exists more evidence on the association between economic inequality and various social outcomes like the ones mentioned above (Pickett & Wilkinson, 2014) Economic inequality is also a determinant of the quality of education accessed by the citizens. Eventually, people of lower status, as determined by low-income levels, end up with lower-quality education thus low-paying jobs and this escalates the poverty levels of such people. Those with high levels of income can afford the high amounts of cash needed to access high-quality education (Holmes, 2014). This way, economic inequality becomes a cycle in which the poor become poorer and the rich richer Conclusion Economic inequality is a prevalent phenomenon in Australia since the 1970s. Major causes of this inequality include polarisation where upgrading is more prevalent than downgrading; globalisation with its limitations on governments’ regulation of the market outcomes; demand for more education and highly skilled workforce, and concentration of resources in the hands of a few individuals. Among the consequences of this inequality include high living standards for the well-off and low living standards for those of the lower status. Ill health is a key element of economic instability. The negative social outcomes of economic inequality include malnutrition, poor health, low-quality education, low life expectancy, and high infant mortality rates, among others. These outcomes are more prevalent among the poor than the rich. Bibliography Australian Council of Social Service, 2015. Inequality in Australia: A nation divided [online]. Available at http://www.acoss.org.au/wp-content/uploads/2015/06/Inequality_in_Australia_FINAL.pdf [Accessed 7 January 2016]. Conley, T n.d. Globalisation and rising inequality in Australia: Is increasing inequality inevitable in Australia? [online]. Available at https://www.adelaide.edu.au/apsa/docs_papers/Others/Conley.pdf [Accessed 7 January 2016] Graham, H 2004. Socioeconomic inequalities in health in the UK: Evidence on patterns and determinants. Lancaster University: Institute for Health Research. Griffiths, P 2011. The creation of income inequality: the impact of government policies in Australia and other OECD economies [online]. International Conference on Income Distribution Theory and Policy. Wuhan City, Hubei Province, China: Zhongnan University of Economics and Law. Available at https://eprints.usq.edu.au/20712/4/Griffiths_Inequality_ZUEL_2011_Revised_AV.pdf [Accessed 8 January 2016]. Holmes, A 2014. Some economic effects of inequality [online]. Parliament of Australia. Available at http://www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_Library/pubs/BriefingBook44p/EconEffects [Accessed 8 January 2016]. Pickett, KE & Wilkinson, RG 2014. Income inequality in health: A causal review [online]. US Department of Health & Human Services. Available at http://www.ahrq.gov/professionals/education/curriculum-tools/population-health/pickett.html [Accessed 8 January 2016]. Steinbach, R 2009. Inequalities in the distribution of and healthcare and its access, including inequalities relating to social class, gender, culture and ethnicity, and their causes [online]. Available at http://www.healthknowledge.org.uk/public-health-textbook/medical-sociology-policy-economics/4c-equality-equity-policy/inequalities-distribution [Accessed 7 January 2016]. Read More