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Why ist he gap between the poor and the rich getting wider?

Elderly 95 years old woman sitting miserably at the table at home and counting remaining coins from the pension in her wallet after paying the bills.
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The „haves“ will be given even more?
Those who are poor usually stay poor. Those who have enough already are getting even more. This is the current trend. But it is bad news for all of us. It sounds unfair: The wealth of Austrians is distributed even more unevenly than previously assumed. This is indicated by a study conducted by the Austrian National Bank (OeNB) in 2022. According to the study, the richest one percent of the population owns 30 to 50 percent of total assets. Or, as the proverb goes: Money breeds money. The rich get richer, the poor get poorer. This was reported in a study by the OECD, the Organization for Economic Cooperation and Development. The ten richest Austrians of 2022 have increased their wealth even faster than the “standard rich” in the past two years. While hundreds of thousands have lost their jobs due to the corona lockdowns, Austrian billionaires are on average 40% richer today than before the COVID-19 pandemic.

Two-thirds have virtually no reserves

This is in stark contrast to the fact that 70 per cent of Austria’s less well-off individuals have no savings at all. Many of them are in debt. At the global scale, things are even worse.
From 2016 to 2021, the wealth of the 62 richest people grew to $1.76 trillion. That's an increase of 44 percent over the same period in which the wealth of the world's poor declined by $1 trillion. Although the world's population increased by 400 million, the wealth of the poor fell by 41 percent.

But why is that so?

Most people earn their incomes by working, i.e. they receive wages or salaries. However, these have not risen particularly in recent years. While the super-rich were able to increase their share of global wealth at record speed during the COVID-19 pandemic, hundreds of millions of people worldwide slipped into extreme poverty. The wealthy benefit from government policies to “stimulate economic growth” by providing investment incentives. They invest their wealth carefully, for example, by investing in luxury real estate which is bought by rich people whose wealth continues to grow, or by buying shares in companies whose price is rising Between 2007 and 2011, the Gini coefficient in Austria rose from 0.269 to 0.282 per year. This means that after the 2008 economic crisis, income and wealth were more unequally distributed than before.

How are the differences measured?

Here are many approaches to measuring income and wealth inequality. The Gini coefficient is one widely used measure. If the coefficient is 0, everyone has about the same. A Gini coefficient of 1 would mean a completely unequal income distribution. It would apply in the theoretical case that a single individual receives all income in a given country, and all the others get nothing. This does not occur in reality. Countries with the greatest inequality have a Gini coefficient of 0.7 or less. Most of them are developing countries with very small elites of rich families. In Europe, Gini coefficients of between 0.2 and 0.4 are the norm. Between 2007 and 2020, the Gini coefficient in Austria increased from 0.269 to 0.282. This means that economic inequality is increasing and being accelerated by the COVID-19 pandemic.

So, what? As long as I’m doing well for myself …

Unequal distribution of income and wealth have negative effects on society at large: There is more crime and less environmental awareness, and social disparities abound. Things are just not as cosy. And unhealthier. More inequality in money distribution is linked to a greater incidence of health problems. And according to the findings of several research studies, not only the poor are affected by this, but the rich too. Little chance of change Inequality in material wealth also means unequal opportunities. Children from poor families are more likely to grow up to be poor adults than kids from wealthier households. This fact has been confirmed in many research studies. The Austrian anti-poverty network “Armutskonferenz” lobbies politicians to promote policies that combat poverty. Links
  • · Armutskonferenz. Network against Poverty and Social Exclusion The Armutskonferenz website provides in-depth information about poverty and its effects and a comprehensive database of material on the topic.
  • OECD(Organisation für wirtschaftliche Zusammenarbeit und Entwicklung) über Ungleichheit.

FAQ

Studies show that a small proportion of the population owns a large part of the wealth – according to the National Bank, the richest one percent holds up to 50% of total wealth. At the same time, many people have hardly any savings or even debts. This inequality has been exacerbated by crises such as coronavirus.
Most people earn their money through work, but wages often rise only slowly. Rich people, on the other hand, can increase their wealth through investments – in real estate or shares, for example. They also benefit more from economic support measures and tax breaks.
The Gini coefficient measures how unequally income or wealth is distributed in a society. A value of 0 means completely equal distribution, a value of 1 means maximum inequality. In Austria, the Gini coefficient has risen in recent years – a sign that the gap between rich and poor is widening.
Large differences in wealth lead to social tensions, more crime and poorer health – not only among the poor, but also among the rich. In addition, children from poorer families often have fewer opportunities for education and advancement.
Organizations such as the Poverty Conference are campaigning for fairer distribution and better social security. Political measures such as fair tax systems, investment in education and targeted poverty reduction can also help to narrow the gap.

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