With thanks to CLASS (The Centre for Labour and Social Studies) and My Fair London, who have produced an excellent booklet called “Why Inequality Matters“, in which they set out a range of policy options to reduce inequality, as follows:
Decreasing the wage gap
Income inequality arises first and foremost in the workplace and it is there that the remedies must start.
- Introducing low pay ratios – The government, local authorities and other public bodies can make sure their pay structure keeps to a low pay ratio and can also encourage employers in both the public and private sectors to adopt low pay ratios, transparency, and other codes of best practice. Government and local authorities can contractually oblige firms paid by them to keep to a low pay ratio – in some firms with public funding the chief executive gets 300 times the pay of the lowest paid workers.
- Paying a living wage – In-work poverty is rising. Introducing a living wage would counteract this growing injustice.
- Restricting top pay rates – Moves to enable shareholders to prevent exorbitant top pay rates should be supported.
- Promoting trade union and employment rights – Extending industrial democracy, worker representation, co-ownership, and other measures will reduce workplace inequality. Trade unions have an important role in improving wage levels for union and non-union members alike. Higher wages mean more spending power. Over the last thirty years, a lower and lower proportion of national income has gone to the majority of workers. Effective unions can raise this proportion, reducing the share going to those already extremely well off. Their work can benefit the entire society, not just union members.
Reforming the tax system
Reforming the tax system can produce greater equality through:
- Increasing inheritance and property tax
- Introducing more progressive taxation policies
- Reducing tax relief on pensions contributions for the highest earners
- Cracking down on those operating through tax havens to eliminate tax evasion and reduce tax avoidance
Improving Public Services
Public services have a massive effect on increasing the wellbeing and opportunities of the worse off. For example, reducing the cost of university education for those who cannot afford it, and increasing the supply of good affordable housing can have a wider impact on levels of inequality. Child wellbeing in the UK is lowest among the leading developed countries and services that improve the lives of poorer children are particularly important.