Negotiating for Social Justice
Edited by Susan Hayter
Susan Hayter and Bradley Weinberg 6.1 INTRODUCTION The global economic crisis that unfolded in late 2008 exposed fundamental shortcomings in the regulation of finance, inadequacies in corporate governance and deepening distributional ‘fault lines’. While the incomes of top earners soared, the wages of those at the bottom of the income distribution stagnated or fell. This was accompanied by a marked decline in the wage share in many developed and developing economies (IMF, 2007; ILO, 2008). Growing pressure from these stagnating incomes contributed to domestic imbalances, such as distorted lending in the financial sector in the USA, which in turn contributed to global imbalances (Rajan, 2010). A United Nations Commission on the reform of the international financial and monetary system which included internationally renowned economists such as Joseph Stiglitz consider the rise in income inequality and stagnating wages to be an important source of the crisis and note: There were many forces contributing to this growth in inequality, including asymmetric globalization, especially that facilitated the greater ease of movement of capital than labour, the weakening of labour unions, deficiencies in corporate governance, and breakdown of social conventions which resulted in greater disparities in compensation between top executives and other workers. (United Nations, 2009, p. 26) This chapter focuses on one particular aspect of the rise in income inequality: the widening gap between high and low wage earners. The gap between high-wage earners (those earning more than 90 percent of earners) and low-wage earners (the bottom 10 percent of earners) has grown...
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