Impact of Pandemic on Inequality – UPSC GS1

Findings of World Inequality Report:
  • Top 10% earn 57% of national income, and within that top 1% earns 22% while the bottom 50% earn only 13% of the income.
  • This deeply impacts social mobility. This has also translated to inequalities in education and the labour market.
What trends emerge from labour market analysis?
  • Since the onset of the pandemic, there has been a decline in labour force participation. This means that despite a young population, the number of people looking for jobs has fallen.
  • Over the same period, the unemployment rate has risen from 7.5% to 8.6%. So among those looking for jobs, those unable to find jobs, even at lower wages have risen.
  • Among those in jobs, the casualization of labour has increased.
How does inequality affect social mobility?
  • Rapid growth lowers the obstacles to mobility. But subdued or uneven growth leads to disproportionate benefits to richer people. For instance, there will be disparities in consumption, income, and wealth.
  • According to ASER Report, the learning gaps between children from poor and affluent households will widen with inequality.
  • This will lead to greater demand for redistribution. Thus, this scenario needs to be arrested for better social mobility.
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