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Economic inequality in Canada - Essay Example

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Economic inequality, defined in terms of individual or household incomes, refers to difference in levels of resource accumulation among the subjects and is a social issue that is significant in Canada. This paper reviews trend in economic inequality in Canada, causes and impacts of the realized level of inequality, and possible solution to the social problem…
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Economic inequality in Canada
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Download file to see previous pages Trend in economic inequality Economic inequality is a common social issue that affects many Canadians, either directly or indirectly. It has for example led to social stratification by economic capacities. Osberg identify five economic classes in the Canadian society and offers a review of times series data for percentage income distribution among Canadians. The evaluation of five economic classes, “bottom 20 %,” “second 20 %,” “middle 20 %,” “fourth 20 %,” and the “top 20 %” identifies concentration of resources in the hands of a few individuals while a majority of the Canadian citizens are within average and poor economic classes (Osberg, 2008, p. 7). Data, obtained from Statistics Canada, reported that by the year 2005, 60 percent of Canadian population only controlled less than 30 percent of the country’s wealth while the larger portion, more than 70 percent was in the hands on the top economic class that forms only 40 percent of the country’ population....
This is attributable to the great depression of the 1970s that contracted profit margins for business organizations and prompted measures for increasing profitability. Reduced wage rates for employees, and layoffs became characteristics to reduce the percentage of wealth ownership by the low classes while the capitalists retained their share of profits. The move to increase organizations’ profitability also led to high remunerations for top managers to facilitate their inputs towards operational efficiencies. Change in demand for labor is another factor to the increasing economic inequality. While Canada is becoming more industrialized and oriented to developing skills-based commodities, demand for skilled labor has risen while demand for unskilled labor has lagged. The trend in demand has therefore led to higher remuneration among skilled workers than among the unskilled to contribute to economic inequality. Effects of globalization that allows the capitalist class to dictate low wage rates for employees has also ensured higher profit margins to increase wealth concentration among rich investors. This is because enterprises can obtain alternative cheap labor through importation of workers or relocating to other countries, and these forces Canadians to accept low remuneration rates (Conference, 2012). Macroeconomic factors have also significantly facilitated the increasing trend of economic inequality. The decreased effectiveness of trade unions has weakened workers bargaining power for equitable remunerations and consequently led to high wage rate disparity. Minimum wage rate has also remained constant and allowed employers to stipulate low wages among the bottom economic class. A shift from a regulated economy to a deregulated ...Download file to see next pagesRead More
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