This essay compares the socio-economic inequality in the United Kingdom and Germany. It discusses the reasons behind the income disparity and its impact on economic growth. The government's role in reducing the gap between the rich and the poor is also highlighted.
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Comparing Political Systems
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Contents INTRODUCTION...........................................................................................................................................3 MAIN BODY.................................................................................................................................................3 Comparison of countries on the basis of socio-economic inequality-.........................................................3 Comparison of countries.........................................................................................................................6 CONCLUSION...............................................................................................................................................7 REFERENCES................................................................................................................................................8
INTRODUCTION Socio-economic inequality refers to the difference between the incomes levels of various people within a society(Barik and et.al., 2016). Countries focus on reducing it to show their economic development. The nations which manage to reduce it are the ones having achieved real economic prosperity. In this essay, focus will be made on socio-economic inequality in U.K. and Germany. MAIN BODY Comparison of countries on the basis of socio-economic inequality- Socio-economic inequality in United Kingdom- There is a high-level of socio-economic inequality in the United Kingdom(Chapman and Meliciani, 2017). There is a vast gap between the income of rich and the income of poor. Interpretation- As seen in this pie-chart, the income shared by top-fifth is 40%, fourth- fifth is 23%, third-fifth is 17 %, second fifth is 13% and the bottom-fifth is 8%.
Therefore, it can be said that a vast majority of income is shared by rich people. There is a less share of poor people in the overall income of the country. Thus socio-economic inequality exists at a mass-scale in the country. Inequality is not just harmful for the economy of any country but it also affects the physicaland mentalhealth,self-esteem,happiness, sense of trust and civicparticipation (Tackling Socio-EconomicInequality In The UK Is An Urgent Human Rights Issue, 2019). Therefore the necessary steps are required to be taken in order to reduce it. The following can be termed as the reasons for increasing socio-economic inequality in U.K.- Lack of education- There are many people who are not able to get proper education. Because of this they either get no work or work with very low wages or salary which becomes a reason for their poverty(Freeman and et.al., 2016). Most of the poor classes in the country are those who are not properly educated which has created inequality between them and the rich. This is the reason why socio-economic inequality has increased a lot in U.K. Homelessness- There is people who do not even have their own home. They have to stay on the roads only. Thus this increases income disparity and becomes another reason for socio-economic inequality in U.K. Unemployment- Unemployment is one of the chief reasons for rising socio-economic inequality in U.K. Many people in the country are not able to find suitable employment as per their needs and requirements. This can be due to varied reasons such as lack of skills, slowdown in the economy etc. This leads to rise in income inequality and poverty and creates a bridge between the rich and poor. Low pay- Low pay offered even to skilled and educated people in U.K. is also a reason for the rising socio-economic inequality(Galama and Van Kippersluis, 2019). This is so because of lower pay the overall income of people does not raise which results in creation of a bridge between the poor and the prosperous. Thus, due to the above-mentioned reasons socio-economic inequality has seen a significant rise in U.K. Different measures are required to be taken by the government so that this inequality can be reduced to a greater extent. Only when this inequality is reducedthen therealdevelopmentinGDPand highereconomicgrowth willbe witnessed. Socio-economic inequality in Germany-
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The socio-economic inequality in Germany has been on a rise. This has impacted the real growth of economy in the country. The welfare schemes launched by the government have not shown a significant impact in reducing this inequality which has been on a rise. Interpretation- From the above graph, it can be seen that most of the income resides with the super-rich and the rich households in Germany. The rest resides with the poor. Therefore this has created a significant income inequality in the country which affects the real economic growth in the nation. There are various reasons for the income inequality in Germany. Some of them are explained as follows- Rising unemployment- Rising unemployment is one of the chief factors behind the income inequality in Germany(Marquant and et.al., 2016). This is so because increase in unemployment has led to a significant decrease in income of various households. Many people are unable to find a well-paying job despite being educated and skilled enough. This decreases the income and leads them towards poverty. Increasing dispersion of market returns- There is an inequality in the market returns especially the labor market returns. This has affected the income level adversely and has led to socio-economic disparity in the country. Changes in the taxation system- Changes in the taxation system have impacted the level of income in the country significantly. This is so because an increase in the tax rates by the government has reduced the income of many middle-income and lower-income
households which has decreased their disposable income to a great extent. This has increased the divide further between the poor and the rich. Changes in the household structure- The household structures have witnessed a lot of change in the country(Ramachandra and et.al., 2017). This is because the structure has shifted from joint families to nuclear families and therefore the income which was used to be pooled earlier is not pooled. Thus the expenditures in the nuclear families have increased significantly and this has led to creation of a divide between poor and the rich. Changes in other socio-economic attributes- There have been changes in various other socio-economicattributesinGermany.Thesearechangesintheage-structure, educational qualifications and other changes in the composition of the population. Due to this, disparity level of divide between the rich and the poor increases a lot. Other changes- Various other changes have occurred in the country which has led to disparity in the income level(Zambo and et.al., 2017). Thus the real growth of the GDP is not happening because there has been a socio-economic divide between the classes of people. Thus, from the above discussion it can be said that in Germany the socio- economic divide between the rich and poor has been increasing a lot due to various reasons mentioned above. The German Government has though taken significant steps to reduce the income gap by determining the minimum level of wages which are required to be paid to the workers in the country. Also, the government needs to work a lot on providing more employment and should also reduce the tax rates so that more income is available for the lower sections of the society. This will help a lot as it will result in reduction of the level of disparity. Comparison of countries BasisU.K.Germany Levelofeconomic development The economic development in the country is high. Its GDP growthrateisquitegood. However it has recently been impacted due to the impact put byBrexit.LowGDPrate naturally leads to an increase in income disparity within the country. The economic development in the country is also high. It has oneofthebesteconomic growth rates in the world. The GDPhoweverhasbeen impacted due to the worldwide economicslowdown. Slowdownintheeconomic growth leads to increase in the income disparity. Natural resourcesTheavailabilityofnatural resourcesinthecountryis quite good. They are available inthecountrysideandthe nation is blessed with various Germanyisalsoblessedin termsofnaturalresources. They can be used to provide employmentopportunities which are crucial for reducing
minerals and resources. Their availabilityiscrucialasit gives opportunities to reduce income disparity. income disparity. Economic opennessTheeconomicopennessof U.K. is good as it is open to various foreign countries. FDI and other investments give a significantopportunityfor reducing the level of disparity. Germany is also open in the terms of economic openness. Investmentscanbeboosted hereinordertoreducethe economic disparity. Democratic structuresThedemocraticstructurein the country is fair. Elections areheldregularlyandthe public is given a chance of electing its leader. Thus this sortofsystemcanwork towards alleviation of poverty and reduction in the income disparity level. Thedemocraticstructureof Germany also is fair towards the people. This structure can be quite helpful as it can result inreductionoftheincome disparity level because it can makepoliciesandspecific guidelines on maintaining the socio-economicparameters whicharesetwithinthe country. Thus all of these variables can impact the socio-economic disparity between classes of people in any given country. In the case of U.K. and Germany these factors have a significant impact and therefore the government in both these countries can take steps in order to reduce this gap between the rich and the poor. Doing so will allow for the real GDP growth in these countries and therefore there will be overall fairness in the system. CONCLUSION From the above report, it can be concluded that socio-economic disparity is prevalent even in the developed countries. It is present in U.K. due to different reasons. It is also present in Germany due to various factors. Thus significant steps can be taken by the government of both the countries so that this disparity is reduced to a great extent allowing for the real growth of the GDP.
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REFERENCES Books and Journals: Barik, A. and et.al., 2016. Socio-economic disparities in tobacco consumption in rural India: evidencefromahealthanddemographicsurveillancesystem.Perspectivesinpublic health.136(5). pp.278-287. Chapman, S. and Meliciani, V., 2017. Behind the pan‐European convergence path: The role of innovation, specialisation and socio‐economic factors.Growth and Change.48(1). pp.61-90. Freeman, J. and et.al., 2016. The importance of broadband for socio-economic development: A perspective from rural Australia.Australasian Journal of Information Systems.20. pp.1-18. Galama, T. J. and Van Kippersluis, H., 2019. A theory of socio-economic disparities in health over the life cycle.The Economic Journal.129(617). pp.338-374. Marquant, F. and et.al., 2016. Risk of childhood cancer and socio‐economic disparities: results of the French nationwide study Geocap 2002–2010.Paediatric and perinatal epidemiology.30(6). pp.612-622. Ramachandra, T. V. and et.al., 2017. Economic disparity and CO2 emissions: The domestic energy sector in Greater Bangalore, India.Renewable and Sustainable Energy Reviews.67. pp.1331-1344. Zambon, I. and et.al., 2017. Beyond the ‘Mediterranean city’: Socioeconomic disparities and urbansprawlinthreeSouthernEuropeancities.GeografiskaAnnaler:SeriesB,Human Geography.99(3). pp.319-337. Online Tackling Socio-EconomicInequality In The UK Is An Urgent Human Rights Issue. 2019. [Online]. Available through:<https://eachother.org.uk/tackling-socio-economic-inequality-in- the-uk-is-an-urgent-human-rights-issue/>