Income gap growing wider – Canada – Income gap growing wider: Canada lags behind 17 developed countries; has no detailed plan to fight poverty, study finds
October 21, 2008. Laurie Monsebraaten, Social Justice Reporter

Poverty and inequality rates in Canada have been on the rise since 1995 and are now higher than the average developed nation, according to a new study.

The income gap is growing throughout the developed world, but the gap between rich and poor in Canada widened more dramatically than in most countries between 1995 and 2005, according to the report released in Paris today.

The 20-year analysis by the 30-member Organization for Economic Co-Operation and Development found only Germany saw a similar rate of increase during the past 10 years.

“After 20 years of continuous decline, both inequality and poverty rates (in Canada) have increased rapidly in the past 10 years, now reaching levels above the OECD average,” says the report.

As in other countries, more single-parent households and people living alone are contributing to income inequality in Canada.

And wages for the rich are increasing, while they have been stagnating or dropping for middle and lower income workers, the report says.

Most affected have been young adults and families with children.

Canada spends less on cash transfers, such as unemployment and family benefits, than other OECD countries and that may be one of the reasons the country fares worse than others, the report suggests.

The report echoes concerns raised by Canadian social research groups about growing income disparity in Canada at a time of strong economic growth.

“It’s a consistent repudiation of the trickle-down theory,” said Armine Yalnizyan, an economist with the Canadian Centre for Policy Alternatives, which has written several reports on the issue.

“Even in a period of dramatic growth in the job market – and Canada has been a leader in job growth in the G-7 in the last 10 years – trickle down has not happened,” she said.

The OECD report underscores the need for federal action, she said, adding every political party except the recently elected federal Conservatives had plans to cut poverty in their campaign platforms.

“It will be interesting to see how the other parties form a coalition of interest on this issue, or if they do,” Yalnizyan said.

With U.S. Democratic leader Barack Obama ahead in the polls and promising to cut poverty in half in that country within 10 years, Canada may soon be one of the only developed countries without a detailed plan to address the problem.

But Lesley Harmer, a spokesperson for retiring Human Resources Minister Monte Solberg, said the government is “taking real action to support Canadians who need help.”

In an email, she listed “vital social programs” the government is strengthening: the Working Income Tax Benefit; the recent extension of affordable housing and homelessness programs; the new retired disability savings program; $100 monthly child care benefits; and supports for seniors, skills training and post-secondary education.

When asked if the government plans to introduce a strategy with goals and timetables she said: “I think what I sent you stands.”

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