The gap between New Zealand’s rich and poor has widened more than in any other developed country during the past 20 years, according to an OECD report.
Figures from the Divided We Stand think-tank show the income of the richest 10 per cent of Kiwis is now more than 10 times that of the poorest 10 per cent.
This is up from a ratio of about six to one in the 1980s and higher than the average income gap in developed nations of nine to one.
The OECD says the main driver behind rising income gaps has been greater inequality in wages and salaries, as the high-skilled have benefited more from technological progress than the low-skilled.
It warned about the rise of the high earners in rich societies and the falling share of income going to those at the bottom, saying governments must move quickly to tackle inequality.
“This study dispels the assumptions that the benefits of economic growth will automatically trickle down to the disadvantaged and that greater inequality fosters greater social mobility,” said OECD secretary-general Angel Gurraacía.
But the rise in part-time and low-paid work also extended the wage gap, the report said.
The main reason for the widening gap was that benefit levels fell in nearly all OECD countries, eligibility rules were tightened to contain spending on social protection, and transfers to the poorest failed to keep pace with earnings growth.
As a result, the benefit system in most countries had become less effective in reducing inequalities over the past 15 years.
Another factor had been a cut in top tax rates for high-earners.