Inequality Highlighted as 10% of Workers Get Half of All Pay

(Bloomberg) -- Workers' share of global income has shrunk “substantially” this century, and the top earners are taking a bigger part of the pie, according to the International Labour Organization.

New research from the ILO shows that low-income earners in advanced economies have been particularly affected, and that just 10% of workers receive nearly half of global pay. The lowest 20% earn less than 1% of total labor income.

The findings will fuel the hot-button topic of inequality, with the gap between the haves and have-nots blamed for anger about capitalism and the rise of populist politicians like U.S. President Donald Trump. Ray Dalio, billionaire founder of the world's biggest hedge fund, has called income inequality in the U.S. a “national emergency.”

In a report published Thursday, the ILO found that between 2004 and 2017, the share of income of the middle class, defined here as the middle 60% of workers, declined to 43% from 44.8%. At the same time, the top 20% of earners increased their average share to 53.5% from 51.4%.

Moreover, the ILO calculates that a 1% rise in the share of the top 5% of earners is associated with a 1.6% decline for the lowest percentile.

“The evolution of the labor income distribution between 2004 and 2017 follows a ‘hockey stick' pattern,” it said. “Substantial loses for the middle and lower-middle class, and large gains for the top.”

It found evidence of this pattern in countries including Germany, the U.S. and the U.K.

In total, workers' share of income is on the decline. In the Americas, it fell 1.6 percentage points between 2004 and 2017, while in Europe the drop was more than 2 percentage points. That implies a bigger portion of aggregate income was allotted to capital, it said.

To contact the reporter on this story: Catherine Bosley in Zurich at cbosley1@bloomberg.net

To contact the editors responsible for this story: Fergal O'Brien at fobrien@bloomberg.net, Brian Swint

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