Based on recent analysis, the average employee in the UK would have to work 52 years' worth of salary to attain the wealth level of the wealthiest 10% of the population.
Growing Financial Divide Across Decades
This research analyzed financial assets information covering the Covid pandemic period and found that back in 2006-08, it would have required nearly four decades of typical employment income to join the richest segment of the wealth distribution.
An economic expert part of the report observed: "Financial divides in Britain are presently so substantial that a typical full-time employee accumulating their complete salary during their working years would continue to be incapable to attain the highest level of the financial hierarchy."
Quantifying the Wealth Divide
The study discovered that the difference between the wealth of the average person and an individual in the richest segment was £1 million in 2006-08, but had increased to £1.3m in inflation-adjusted terms by 2020-22.
The analyst continued: "These differences are particularly worrying as economic movement in Britain is low – individuals who begin life well-off tend to stay wealthy, and conversely applies."
Proportional Economic Disparity
Despite the financial disparity widening in absolute terms, the percentage of overall assets in the UK possessed by the wealthiest families – called "proportional economic disparity" – has been "broadly stable since the eighties," as stated in the study.
Throughout these years, overall assets in the UK rose substantially from three times the annual GDP, to approximately 7.5x.
Factors of Wealth Inequality
Termed "passive" gains, via rising house prices and changes in pension valuations, were the primary factors of the expanding economic divide over the past decade, according to the study.
These increases typically went to older, property-owning households, the study demonstrates – exacerbating the intergenerational wealth divide.
Intergenerational Wealth Disparities
The typical financial disparity between people in their early 30s and those in their early 60s grew by more than 100% in inflation-adjusted terms, from £135,000 in pre-financial crisis, to 310 thousand pounds.
Geographic Differences
Additionally, there were pronounced geographic differences, with the average level of wealth in recent years amounting to 290 thousand pounds in the southeastern region, where real estate values have typically increased quickly, as opposed to £110k in the northeastern region.
Health Crisis Years Impact
Amid the health crisis, when countless laborers were covered under the public-funded employment protection, and pandemic lockdowns limited opportunities for spending, the data shows countless homes were able to save, increasing their wealth.
Wealthier families fared much better, though. "The typical family in the lowest-income quintile saw their available funds rise by merely £80 during the COVID years (across the pandemic timeframe), broadly the same as the two years pre-pandemic. On the other hand, the typical family in the wealthiest fifth saw their liquid savings increase by £4,200," the analysis concludes.
