Technological shifts and a more globalised world are fundamentally changing our economy. These changes disproportionately affect young people, experiencing both higher levels of unemployment and underemployment, at the same time as little or no wage growth.
In Australia we love the concept of the Fair Go; it’s ingrained in our society. But what happens with that Fair Go is challenged by inequality within our systems and the outcomes we experience?
A report from Australian Council of Social Service and University of New South Wales Sydney on Inequality in Australia revealed key changes in both income and wealth inequality for young Australians in past decades. Their findings highlight a need to rethink how we’re addressing inequality in Australia to ensure our young people and future generations can still truly experience Australia’s Fair Go.
According to the World Inequality Report 2018, income inequality has increased in nearly all countries since the 1970s. Some economists and policy makers argue this is inevitable; others argue the opposite.
No matter which side you take in this debate, it’s clear in Australia that income inequality has increased since the 1980s. Further, it plateaued above the Organisation for Economic Co-operation and Development’s (OECD) average following the Global Financial Crisis.
Currently a person who is in the top 20 percent income group has five times as much disposable income than someone in the lowest 20 percent. When looking at the lowest income bracket we find troubling results — of those receiving social security payments in the lowest 5 percent of average incomes (a mere $436 per week), nearly 47 percent receive the Newstart allowance.
Wealth inequality to some extent is expected across age brackets. Young people typically have accumulated less wealth, as they are only at the start of their working lives. However, what is surprising is that the disparity between the wealthiest and least wealthy people was biggest for people under 35 years of age. This divide has widened significantly 2004.
Increased wealth and income inequality has negative effects on a person’s entire life — their ability to invest in education, to create businesses and even to participate in society. Both wealth and income inequality can entrench social divide and perpete low income or poverty cycles that last for generations.
These results paint a stark picture between an Australia where everyone has an opportunity to succeed, and one where entrenched inequality continues to disproportionately affect young people.
The OECD estimates that rising income inequality has reduced economic growth by 4 percent across OECD countries from 1990 to 2010. As such, it’s clear that rising inequality isn’t just bad for our young people and future generations, but for our society and economy as well.
Find out how FYA are demanding better for Australia and young people in 2019 through a Future Skills Framework for 2030. Join our call and find out more.