Rich, poor gap widens

London, June 20:

Globalisation has reduced the bargaining power of unskilled workers and pushed up inequality in many western countries, the OECD said yesterday, urging governments to improve their social safety nets.

The Paris-based rich nations club said in its annual Employment Outlook that the prospect of offshoring was likely to have increased the vulnerability of jobs and wages in developed nations.

The report stressed that though more open trade and investment policies had a powerful upward effect on living standards around the world, ‘some workers may lose from globalisation’. It says these were usually those working in industries in western countries that decline as a result ofcompetition from cheap imports.

“Millions are benefiting from globalisation but at the same time there’s a feeling something’s wrong with the process,” said OECD’s secretary general, Angel Gurria. Governments needed to address public conce-rn over jobs and pay in a world being transformed at unprecedented speed by te-chnology, cheap transport and communications, and “the rise of China, Russia, India and Brazil with vast pools of cheap labour.”

Those four countries account for 45 per cent of the world labour supply today, compared to 19 per cent for the OECD countries, which include the US, Japan and much of Europe.

The report pointed to a ‘remarkable’ fall in the share of wages of national income in OECD member countries in the past couple of decades. Japanese wages have fallen by around a quarter as a share of GDP in the past 30 years, while they have dropped by 13 per cent in the 15 wealthier EU countries and seven per cent in the US. US wages as a share of GDP remain ahead of those in the EU.

The report showed rising wage inequality in most OE-CD members over the past decade with the notable exceptions of Spain and Ireland. In Britain, the gap between rich and poor rema-ined virtually unchanged, although its level was one of the higher ones. The figures run only to 2005, though, since when inequality in the UK has increased.