United Kingdom - Poverty and wealth

The United Kingdom has traditionally had deep divisions between the wealthy and poor. Unlike the United States, the middle class of the United Kingdom is smaller and there continues to be a more formal class system in the country. The United Kingdom has the highest degree of income inequality of any of the EU nations. The wealthiest 10 percent of the population controls 24.7 percent of the kingdom's wealth, while the poorest 10 percent controls only about 2.4 percent of wealth. Most significantly, since 1990 the poorest segment of the British population has seen a decline in income of about 8 percent, while the richest sector of the population has seen an increase in income of almost 68 percent. About 17 percent of the British population is considered to live in poverty. However, it should be noted that unlike most other developed nations, the United Kingdom does not have an official definition of poverty. Nonetheless, a government survey estimated that 22 percent of Britons were underpaid (paid at a rate that would not support the housing, food, and transportation needs of an individual).

The poor in the United Kingdom suffer from a variety of impediments that make it difficult to advance

GDP per Capita (US$)
Country 1975 1980 1985 1990 1998
United Kingdom 13,015 14,205 15,546 18,032 20,237
United States 19,364 21,529 23,200 25,363 29,683
Germany N/A N/A N/A N/A 31,141
France 18,730 21,374 22,510 25,624 27,975
SOURCE: United Nations. Human Development Report 2000; Trends in human development and per capita income.

economically or socially. For instance, 20 percent of all Britons do not have a bank account. In addition, the infant mortality rate for the poor was 8.9 deaths per 1,000 births, while the rate for the middle class was 5.3 deaths per 1,000 live births, and only 4 deaths per 1,000 live births for the wealthiest families. Finally, the middle and upper classes have an average life expectancy that is 7 years longer than that of the poor. Poverty in the United Kingdom is partially alleviated by several social security programs. The most significant of these is the national health care system, or NHS. This provides essentially free health care to all Britons. However, recent economic problems with NHS has led to efforts to economize and some reduction in services. Studies continue to show that the more affluent parts of society have better health care since they can afford some private medical services.

The country's first minimum wage law did not go into effect until 1999. Since that time, government agencies have collected US$4 million for employees who were still paid less than the minimum wage of US$5.50 per hour. While poverty rates increased in the United Kingdom during the 1990s, the unemployment rate decreased. In 2000, unemployment stood at its lowest level since the 1970s at 6 percent. However, unemployment rates are higher among several groups including minorities, Catholics in Northern Ireland, and the country's

Distribution of Income or Consumption by Percentage Share: United Kingdom
Lowest 10% 2.6
Lowest 20% 6.6
Second 20% 11.5
Third 20% 16.3
Fourth 20% 22.7
Highest 20% 43.0
Highest 10% 27.3
Survey year: 1991
Note: This information refers to income shares by percentiles of the population and is ranked by per capita income.
SOURCE: 2000 World Development Indicators [CD-ROM].

Household Consumption in PPP Terms
Country All Food Clothing and footwear Fuel and power a Health care b Education b Transport & Communications Other
United Kingdom 14 7 9 3 3 6 58
United States 13 9 9 4 6 8 51
Germany 14 6 7 2 10 7 53
France 22 7 9 3 8 12 40
Data represent percentage of consumption in PPP terms.
a Excludes energy used for transport.
b Includes government and private expenditures.
SOURCE: World Bank. World Development Indicators 2000.

youth. In order to help families who only earn minimum wage, the working families tax credit was established in 1999 to provide all families with a minimum weekly income of US$320. About 1.5 million British families receive some government assistance.

Poverty rates are highest among ethnic minorities. For instance, the poverty rate and unemployment is twice as high for people of African descent than it is for white Britons. Minorities receive only about 90 percent of the pay of their white counterparts in similar occupations. Although ethnic minorities make up only 2.8 percent of the population, they make up 12 percent of the poor. Women face even greater degrees of economic discrimination than do minorities, especially in hiring, promotion, and pay. On average, women receive only about 84 percent of the pay of their male counterparts who are working in the same jobs. A recent government report predicted that it would be the year 2040 before women gained equity in pay. About 44 percent of all women work, but women also have the highest rate of part-time work (45 percent of all women have only part-time jobs).

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