Income Inequality: Causes, Impacts, and Mitigation Strategies

This report provides a comprehensive analysis of income inequality, examining its various causes and effects on both organizations and countries. It explores factors such as education levels, skill gaps, gender discrimination, and technological advancements that contribute to income disparities. The report highlights examples of companies accused of income inequality, such as Nike, Google, and Uber, and discusses the impact of unequal wages in various countries, including Thailand, India, Russia, and Turkey. Furthermore, it suggests recommendations to reduce income inequality, emphasizing the importance of transparency in government, increased investment in education and technical training, raising minimum wages, and providing childcare benefits. The report concludes that addressing income inequality is crucial for fostering economic growth and development.

Running head: Inequality as a Major Issue
Inequality as a Major Issue
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1Inequality as a Major Issue
Executive Summary
The following paper is based on inequalities in organisations and countries, which is affecting
the growth of the world and raising poverty. The paper initially provides various causes of
inequality. Under this section, it includes inequalities in organisation and countries. After
that, the paper includes a recommendation on the various problems of inequality. The study
carefully structures the entire paper to include relevant as well as available information to
support the findings.

2Inequality as a Major Issue
Table of Contents
Introduction................................................................................................................................3
Various causes of Income Inequality.........................................................................................3
Companies accused of Income Inequality..............................................................................4
Countries suffering from Unequal Wages..............................................................................5
Recommendations to reduce Income Inequality........................................................................5
Conclusion..................................................................................................................................6
References..................................................................................................................................7
Appendix....................................................................................................................................9

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Introduction
Several economies and corporations consist of income inequalities in different forms.
Both the advanced as well as the emerging economies, are heavily affected by the presence of
a large and widening gap between wages. This increase in income inequality is enlarging the
distance between the wealth of the rich and the poor. This negative factor and large
differences in income distribution are affecting the growth of economies. This factor is one of
the crucial reason behind the stagnated growth of a developing economy. Moreover, the
large-scale poverty in the advanced economies is an outcome of the unequal income
distribution. Economies with differences in income between individuals have higher rates of
criminal activities, health problems, political instabilities, increased malnutrition and greater
rates of illiteracy. Apart from economies, there are income inequalities within a corporation
as well. The larger corporations tend to differ between wages in terms of degrees, gender and
in certain cases relations. Therefore, there is a greater number of problems or negative effects
derived from income inequality. As a result, the following study tries to highlight the major
causes of inequality in income. In addition to this, the study includes the unequal distribution
of wages in companies and countries. Lastly, the study provides a plausible recommendation
to reduce income inequality to foster economic and business development.
Various causes of Income Inequality
Income differences are made not by nations but mainly by corporations. There can be
different types of reasons behind employers providing different sets of wages to their
employees. These ranges from the level of education and high skills to gender
discriminations. In this modern era, technology is one of the most important factors for
globally competitive companies. As a result, companies hire workers with high analytical
skills and knowledge to prosper in business. Developing or emerging economies have greater
illiteracy rates. In addition to this, the skills infused within the educated workers are low. This
results in offering lower wages to such employees (Alvarez, 2015). Thus, a greater supply of
relatively low-skilled labour exists in a free-market economy. The demand for high-skilled
labour and supply of irrelevant employees causes excess supply situation in the labour
market. Hence, this reduces the wage rate of the market and makes the situation worse-off.
This leads to the formation of inequality in income distribution.
Apart from the education and skills of workers, an increase in technological
innovation is affecting the demand for labour. For workers with lower skills and education

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level, operating highly technical types of machinery becomes difficult. This affects their
wages and leads to a poor standard of living. In this era, manufacturing industries are
dominating the marketplace. Thus, such corporations require employing effective as well as
efficient employees. As a result, there is a difference in wages paid to technical engineers and
factory workers. Consequently, this leads to an income gap within the manufacturing
industry. The large-scale youth unemployment in advanced economies and falling wages is a
major factor and is related to unequal income distribution. America has income differences
between the Hispanic, black and white populations. Research evidence suggests that
population with white skin tone have greater wages as well as employment in the United
States, as compared to black and Hispanic or the Latin ones (Balcioglu, 2016). After the race,
various companies differentiate between male and female employees. Women complain
against gender biasedness or discrimination made in the top or leading global organisation.
This inequality treatment leads to a negative outcome for the organisations' reputation.
Moreover, America has greater female unemployment than their male counterparts do.
Additionally, in America figures suggests that businesspersons have a higher increase in their
salaries than the mass population. Thus, the above evidence indicates that there are several
reasons behind the presence of income inequality between nations and within corporations.
Companies accused of Income Inequality
Several well-known corporations are accused of discriminating against gender.
Women randomly file cases against companies for providing lower salaries, benefits and
working liberty than male employees provide. Nike is the top sportswear-manufacturing
brand in the world and is popular for its shoes and sweatshirts. This leading global
corporation has been accused of violating and making gender discrimination with female
employees. As per reports, Nike has provided a lesser amount of pay to its female employees
and is not providing enough benefits. The alleged discrimination made by Nike affect its
reputation (bloomberg.com, 2019). In addition to this, Nike had to face a severe lawsuit. This
forced Nike to offer a higher pay job to the women. The US administration has forced Nuked
to make serious structural changes within the organisation to maintain its reputation in the
garment industry. Apart from Nike, well-known companies like Google and reputed cab
driving company Uber has been facing lawsuits for making gender discrimination within the
corporation (vox.com, 2018). All these lawsuits are regarding discrimination in income and
employee benefits.

5Inequality as a Major Issue
In between 1996 and 2008, the Federal Court of the United States recorded more than
five hundred cases regarding gender and workplace discrimination. The cases registered
consisted of bias in training and similar educational profiles. Nike has also been accused of
discriminating in wages in terms of the colour of a workers skin tone. This is a severe
violation of the Equal Pay Act of the Federal Court of Justice. After the tragic cases filed
against Nike, the global brand had to publish a report displaying the working wages of female
and male employees (Forbes.com, 2020). The top officials of Nike address the restructuring
of corporate policies that have been implemented to reduce workplace discrimination within
the organisation (Inequality.org, 2018).
Countries suffering from Unequal Wages
Apart from income inequality in organisations, countries are divided into groups and
marked as the unequal countries in terms of income and workplace rights. As already
mentioned, most of the developing economies face inequality in income distribution due to a
lower level of education, poor knowledge, low-skills and malnutrition. The top-rated unequal
economies include Thailand, India, Russia and Turkey (Businesstech.co.za, 2020). Inequality
in Thailand is affected by an increase in awareness among the population. On the other hand,
several reports claim that Thailand is controlled and dominated by billionaires (ASEAN
Today, 2020). In addition to this, there is a fall in competitiveness in the private sector and an
increase in corruption, which is leading to wide discrepancies with an economy
(bangkokpost.com, 2020). Evidence indicates that countries with a higher level of corruption
and lack of transparency in government tend to have greater inequalities in income and
workplace environment (NPR.org, 2020). For instance, all the four countries mentioned
above have a higher level of corruption in their political system and lower transparency in
government policies. India and Turkey have a corruption level of 40, Thailand has 37 points
and Russia with the highest number 29 among the other three countries (transparency.org,
2020). This lack of transparency in government laws provides immense power to
organisations and induces them to violet laws. Therefore, corruption can be considered as one
of the factors leading to inequality.
Recommendations to reduce Income Inequality
As already analysed in the report, there are certain prominent factors, which is
creating a wide gap between gender, rich and poor, and employees. Therefore, the
administration of a country should be focusing on managing such issues to combat the

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negative effects possessed by inequality. The first and most important factor is to include
transparency in government and politics. This is because corruption is the root cause of all
problems in society. In addition to incorporating transparency in the organisation, the
government should increase its investments in education and technical training to provide a
substantial amount of education and necessary education to the workforce (Batabyal &
Chowdhury, 2015). This investment in social factor can help in increasing the demand for
labours in the market. Moreover, investment in education is not the end for any government;
administration should focus on increasing minimum wages to raise the stagnated wages of
economies like the US, Saudi Arabia, Australia and the UK. Increasing wages can help in
reducing unemployment and poverty as well. Other than this, the government should provide
childcare benefits to working employees with subsidised rates and bring reforms in taxation,
to increase workforce participation. This can help in eliminating inequality in income and
deduce the gap between the rich and the poor.
Conclusion
The evaluation concludes on the note that no matter the different categories of a
country, any economy can be threatened by inequality. Moreover, inequality exists in both
organisations and countries and are closely related to another. The primary causes of
inequality in income are lower educational qualifications and unskilled labour. Other factors
are transparency in administration, gender and colour biasedness. Advanced economies have
unequal income due to disparity in gender, colour, religion and literacy. On the other hand,
emerging economies are affected by illiteracy, corruption, taxations and many other factors.
In addition to economies, there is inequality within companies like Google, Nike, Uber and
many others based on gender and skin colour. Therefore, the government should introduce
reforms in policies and laws to reduce inequality because inequality has the power to reduce
the growth of an economy.

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References
Alvarez, I. (2015). Financialization, non-financial corporations and income inequality: the
case of France. Socio-Economic Review, 13(3), 449-475.
ASEAN Today. (2020). Thailand's wealth inequality is the highest in the world: What will
this mean for the upcoming elections? |. Aseantoday.com. Retrieved 29 February
2020, from https://www.aseantoday.com/2019/01/thailands-wealth-inequality-is-the-
highest-in-the-world-what-does-this-mean-for-upcoming-elections/
Balcioglu, H. (2016). Multinational Companies and Wage Inequality in the Host Country:
The Case Study of Turkey. International Journal of Economic Perspectives, 10(4).
bangkokpost.com, (2020). Limited, B. (2020). Thai inequality: What we should
know. https://www.bangkokpost.com. Retrieved 29 February 2020, from
https://www.bangkokpost.com/opinion/opinion/1840739/thai-inequality-what-we-
should-know
Batabyal, S., & Chowdhury, A. (2015). Curbing corruption, financial development and
income inequality. Progress in Development Studies, 15(1), 49-72.
bloomberg.com, (2019). Bloomberg - Are you a robot?. (2020). Bloomberg.com. Retrieved
29 February 2020, from https://www.bloomberg.com/news/articles/2019-02-27/nike-
loses-initial-challenge-to-gender-bias-class-action-lawsuit
Businesstech.co.za, (2020). Writer, S. (2020). These are the most unequal countries in the
world – including South Africa. Retrieved 29 February 2020, from
https://businesstech.co.za/news/wealth/338943/these-are-the-most-unequal-countries-
in-the-world-including-south-africa/
Forbes.com, (2020). How Nike's Move On Equal Pay Could Point To Future Market Success.
(2020). Retrieved 29 February 2020, from
https://www.forbes.com/sites/tanyatarr/2018/07/27/how-nikes-move-on-equal-pay-
could-point-to-future-market-success/#82edc956e0af
Inequality.org, (2018). Nike Says ‘Believe In Something.’ Can It Sacrifice Something, Too? -
Inequality.org. (2018). Retrieved 29 February 2020, from https://inequality.org/great-
divide/nike-says-believe-in-something-can-it-sacrifice-something-too/

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NPR.org, (2020). Npr.org. Retrieved 29 February 2020, from
https://www.npr.org/sections/goatsandsoda/2018/04/02/598864666/the-country-with-
the-worlds-worst-inequality-is
transparency.org, (2020) e.V., T. (2020). Corruption Perceptions Index
2017. www.transparency.org. Retrieved 29 February 2020, from
https://www.transparency.org/news/feature/corruption_perceptions_index_2017
vox.com, (2018). Why the gender discrimination lawsuit against Nike is so significant.
(2018). Vox. Retrieved 29 February 2020, from
https://www.vox.com/2018/8/15/17683484/nike-women-gender-pay-discrimination-
lawsuit

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Appendix

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