The analysis shows the top one per cent of Australian earners take home as much in a fortnight as the lowest five per cent of earners do in a year.
It also shows the richest 20 per cent of Australian households own 62 per cent of all wealth, while the lowest 50 per cent own just 18 per cent — and this gross level of inequality will have a profoundly negative impact on our overall quality of life if we don’t tackle it head-on now.
That is the bleak warning from researchers at the Australian Council of Social Service (ACOSS) and UNSW Sydney who say the current situation is “unacceptable and harmful” to the Aussie way of life. And, it’s going to get worse if we don’t do anything about it.
“Our finding that those in the highest one per cent earn as much in a fortnight as a those in the lowest five per cent in a year deeply challenges our sense of Australia as an egalitarian country,” ACOSS chief executive officer Dr Cassandra Goldie said.
“The Australian experience in recent decades shows that inequality has increased strongly in economic boom times and flattened with a slower economy and slow wage growth across the board. We should not accept increased inequality as an inevitable by-product of growth.”
The figures also show the highest 20 per cent of individual earners live in households with five times as much income ($3978 per week after-tax on average) as people in the lowest 20 per cent ($735 per week).
At the extreme end of the scale, the top one per cent have an average weekly disposable income 26 times the income of a person in the lowest five per cent.
It also shows the average household wealth in the highest 20 per cent group is $2.9 million, five times that of the middle 20 per cent and almost a hundred times that of the lowest 20 per cent at $30,000.
UNSW research professor in social policy Peter Saunders said the level of inequality unearthed in the study will come as a surprise to many.
“Excessive inequality is unacceptable and harmful to society and to the economy,” he said. “When people with low incomes and wealth are left behind, they struggle to reach a socially acceptable standard and to participate in society. This causes divisions in our society.
“As the OECD and IMF have pointed out in recent years, too much inequality is also bad for the economy.
“When resources and power are concentrated in too few hands, or people are too impoverished to participate effectively in the paid workforce, or acquire the skills to do so, economic growth is diminished.”
THE SKY ISN’T FALLING
However, the figures have been contradicted by a comprehensive annual survey of household wellbeing, conducted by the Melbourne Institute, which shows the number of Australians living in poverty is falling, with child poverty hitting the lowest it has been over the 2001 to 2016 period.
Roger Wilkins, director of the Household Income and Labour Dynamics Australia (HILDA) survey, said the figures show disadvantage in Australia is actually decreasing.
That’s because the figures show high incomes have fallen over the past five years — when you take inflation into consideration — from 1.97 times the median income in 2011 to 1.9 times in 2016.
In 2009, the median income earner was paid at least 2.21 times as much as someone in the bottom 10 per cent of earners. However, that margin has now dropped to 1.97 times.
“All this language about the sky falling, in terms of households struggling and the spread of disadvantage, is not borne out by the evidence,” Professor Wilkins told The Australian.
“We’re not seeing the enormous improvement in income that we were seeing in the period up to the global financial crisis, but we’re not seeing anything like we saw in the 1991 recession.”
However, the same research also shows the typical Australian household hasn’t seen their post-tax real income rise since 2009.
Back then, the median household had a disposable income of $79,160, at 2016 price levels.
And in 2016, the latest year of HILDA data available, the median income was barely higher at $79,244.
UNDEREMPLOYMENT AND THE ‘GIG’ ECONOMY
Worryingly, the latest HILDA data also shows a spike in underemployment across the Australian economy — especially for men aged 18-64.
“From 2001 until 2008, employment participation had been rising and unemployment had been falling,” the report’s authors wrote.
“Since then, the labour market has been relatively flat, with the proportions of men and women employed remaining below their 2008 peaks and the proportions unemployed remaining above the 2008 trough.”
For men aged 18-64, the part-time employment rate shot up from 10 per cent to approximately 14 per cent from 2008 to 2016.
In the same period full-time employment dipped from 73.3 per cent in 2008 to 67 per cent in 2016 and full-time employment for women aged 18-64 was also slightly down from 40 per cent in 2008.
The report’s authors also say the data debunks the myth about the growth of the so-called-gig economy — for firms like Uber where employees are technically self-employed.
That’s because the data shows that self-employment had actually dropped significantly since 2001.
“The HILDA survey evidence indicates that, if the gig economy is growing as rapidly as is commonly believed, then either it involves the substitution of one type of self-employed worker for another (as might be happening in the taxi industry) or it is largely consigned to second jobs,” they wrote.
“This coincidence of declining employer numbers with high employment rates suggests that self-employment is not the engine of employment growth that it is so often claimed to be.
“Less clear is the source of this decline. The most likely explanations, however, lie in factors such as globalisation and technological change that have worked in favour of larger firms.”