Canada failing to close income inequality gap: Report

But ranks high in equality of opportunity
||Last Updated: 02/05/2013

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.

Canada places seventh out of 16 peer countries in the How Canada Performs: Society analysis, based on international data from the Organisation for Economic Co-operation and Development.

“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 fifth 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, said the Conference Board.

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", found the report.

Aside from these results, Canada gets solid grades in the 17-indicator analysis. For example, Canada ranks first in citizen’s acceptance of diversity. Canada also gets top marks on measures of:

• life satisfaction

• elderly poverty rate

• income gap between disabled and able-bodied workers

• suicide rate.

Canada’s performance in 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, said the Conference Board.

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