Inequality harms long-term economic growth, warns OECD

Brisbane, Nov 14 (IANS/EFE) The Organisation for Economic Cooperation and Development (OECD) Friday warned that current high levels of inequality can harm long-term growth, and advocated a greater redistribution of resources.

OECD Secretary-General Angel Gurria said a study by the organisation showed that an increase in inequality could cause a reduction of up to 7.5 percent in the GDP per capita in the next 25 years.

Speaking at a meeting of trade unions in Brisbane prior to the G20 Summit this weekend, Gurria said that the economic crisis has increased the gap between rich and poor.

He urged that G20 strategies take into account not only growth and job creation but also inequalities, according to the text of his speech provided to the media.

The secretary-general added that the disparity in wages limits the ability of young people from poor socio-economic environments to invest in training, enter the labour market and participate in society, which has repercussions on growth.

"Some redistribution of resources may favour a more inclusive growth but this is not enough. The policy should be to equip people with the necessary training so that they can take advantage of their circumstances and adapt when they change," he stressed.

Gurria demanded the creation of less precarious work favouring the incorporation of young people into the labour market and correcting the inequality in wages, as well as opportunities to promote women and improve training and cooperation between the public and private sectors.

According to the OECD, 10 percent of the world's richest population has an income 10 times higher than the 10 percent of the poorest population, compared to seven times in 1980 and eight in 1990.

At this weekend's G20 summit, the OECD will present a plan on tax base erosion and shifting profits.

The plan, which in September was assumed by the G20 finance ministers, seeks to prevent multinationals from not paying taxes where they generate profits, artificially relocating the origin of their activity to countries with lower taxation.

--IANS/EFE

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