A Report: Comparing Socio-Economic Inequality in the UK and Germany

This report provides a comparative analysis of socio-economic inequality in the United Kingdom and Germany. The introduction defines socio-economic inequality and its importance in economic development. The main body analyzes the income disparity in both countries, examining contributing factors such as lack of education, homelessness, unemployment, and low pay in the UK, and rising unemployment, market returns, taxation changes, and household structure changes in Germany. It includes interpretations of pie charts and graphs to illustrate income distribution and the impact of these factors. The report then compares the two countries based on their level of economic development, natural resources, economic openness, and democratic structures. The conclusion summarizes the findings and suggests potential government actions to reduce socio-economic disparity and promote real GDP growth. References to books, journals, and online sources are included.

Comparing
Political
Systems

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
physical and mental health, self-esteem, happiness, sense of trust and civic participation
(Tackling Socio-Economic Inequality 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
reduced then the real development in GDP and higher economic growth will be
witnessed.
Socio-economic inequality in Germany-

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-economic attributes in Germany. These are changes in the age-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
Basis U.K. Germany
Level of economic
development
The economic development in
the country is high. Its GDP
growth rate is quite good.
However it has recently been
impacted due to the impact put
by Brexit. Low GDP rate
naturally leads to an increase
in income disparity within the
country.
The economic development in
the country is also high. It has
one of the best economic
growth rates in the world. The
GDP however has been
impacted due to the worldwide
economic slowdown.
Slowdown in the economic
growth leads to increase in the
income disparity.
Natural resources The availability of natural
resources in the country is
quite good. They are available
in the countryside and the
nation is blessed with various
Germany is also blessed in
terms of natural resources.
They can be used to provide
employment opportunities
which are crucial for reducing

minerals and resources. Their
availability is crucial as it
gives opportunities to reduce
income disparity.
income disparity.
Economic openness The economic openness of
U.K. is good as it is open to
various foreign countries. FDI
and other investments give a
significant opportunity for
reducing the level of disparity.
Germany is also open in the
terms of economic openness.
Investments can be boosted
here in order to reduce the
economic disparity.
Democratic structures The democratic structure in
the country is fair. Elections
are held regularly and the
public is given a chance of
electing its leader. Thus this
sort of system can work
towards alleviation of poverty
and reduction in the income
disparity level.
The democratic structure of
Germany also is fair towards
the people. This structure can
be quite helpful as it can result
in reduction of the income
disparity level because it can
make policies and specific
guidelines on maintaining the
socio-economic parameters
which are set within the
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.

REFERENCES
Books and Journals:
Barik, A. and et.al., 2016. Socio-economic disparities in tobacco consumption in rural India:
evidence from a health and demographic surveillance system. Perspectives in public
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
urban sprawl in three Southern European cities. Geografiska Annaler: Series B, Human
Geography. 99(3). pp.319-337.
Online
Tackling Socio-Economic Inequality 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/>