Canada failing to close the income inequality gap
by Conference Board of Canada | Feb. 4, 2013:
OTTAWA – Canada has been unable to reverse the rise in income inequality – and poverty rates – that occurred in the 1990s. Low rankings on these social equity measures mar an otherwise solid “B” grade in The Conference of Canada’s Society report card, released today.
Canada places 7th in the How Canada Performs: Society analysis, based on international data from the Organisation for Economic Co-operation and Development.
- Canada gets an overall “B” grade and ranks 7th of 17 countries
- One in seven Canadian children live in poverty.
- 2008-09 financial crisis and recession increased the share of people in low income; elderly and working-age Canadians were most affected
“Despite our overall “B” grade, comparatively high rates of poverty and a large gap in income levels can put stress on a society and on the economy. Rising poverty rates and greater income inequality can mean a weakening in labour force attachment and social cohesion,” said Daniel Muzyka, President and CEO of The Conference Board of Canada.
Canada ranks 12th on the income inequality indicator. Income inequality rose markedly in the 1990s before stabilizing in the early 2000s. Since 1990, the richest 20 per cent of Canadians has increased its share of total national income, while the poorest and middle-income groups lost share.
Although Canada has a high level of income inequality compared to most of its peers, it surpasses most other countries in intergenerational income mobility. Canada earns an “A” grade and ranks 5th of 13 peer countries on this indicator. Intergenerational income mobility can be seen as a measure of equality of opportunity, as it measures how likely individuals are to remain in the same income class as their parents.
Canada ranks 15th on both child poverty and working-age poverty indicators. The child poverty rate of 15.1 per cent is higher than it was in the mid-1990s. Canada’s rate of working-age poverty increased from 9.4 per cent in the mid-1990s to 11.1 per cent in the late 2000s. Compared to its peers, Canada had the third highest increase in the working-age poverty rate during this period. As a result, Canada’s grade for this indicator slipped from a “C” to a “D”.
Aside from these results, Canada gets solid grades in the 17-indicator analysis. For example, Canada ranks first in citizens’ acceptance of diversity. Canada also gets top marks on measures of:
- life satisfaction;
- elderly poverty rate;
- income gap between disabled and able-bodied workers; and
- Suicide rate.
Canada’s performance is the Society category is better than many of its peers, but it ranks below the Nordic countries, the Netherlands, and Austria – all of whom get ‘A’ grades. The United States is by far the worst performer overall; moreover, the U.S. ranks last in six of the 17 indicators.
How Canada Performs is a multi-year research program at The Conference Board of Canada to help leaders identify relative strengths and weaknesses in Canada’s socio-economic performance. The How Canada Performs website presents data and analysis on Canada’s performance compared to 16 peer countries in six performance categories: Economy, Innovation, Environment, Education and Skills, Health, and Society.
SOURCE Conference Board of Canada
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