The Economics of Equality

There is strong evidence that economic inequality has many damaging economic outcomes, and that a more equal society benefits all of us (The Equalities Review (2007) Fairness and Freedom: The Final Report of the Equalities Review [Cabinet Office: London 2007] p.19)

It is also clear that the level of poverty is less important than the level of wider inequality in a society (The Spirit Level: Why Equality is Better for Everyone (2010) Wilkinson & Pickett [Penguin 2010] . Inequality causes health and social problems for people at the top of society as well as for those at the bottom. So inequality creates a lose/lose position. A more equal society focuses resources on those groups who experience persistent disadvantage because of factors beyond their control. It uses scarce resources much more efficiently. It increases the level and quality of human skills and resources, and creates more stability and prosperity in society as a whole.

Changes in wider demographics and in the make-up of the UK workforce, skills shortages, and skills gaps in a fast-developing global economy, and major cuts in public services all mean that employers need to:

  • Maintain their place as “employers of choice”, and ensure that staff from all backgrounds have a positive experience while working for them;
  • Attract future staff from more diverse backgrounds;
  • Improve staff recruitment to ensure diverse workforces to provide services to increasingly diverse customers and communities;
  • Adopt a more flexible approach to working practices, to encourage staff retention, save on recruitment costs and enable staff to balance work and personal commitments;
  • Prevent potential legal and compensation costs, impact on morale, adverse publicity and reputational damage of discrimination cases.

For good business reasons, many public sector organisations are recognising the negative organisational effects of disadvantage and inequality, and questioning traditional management practices. An organisation is more likely to attract people from a wider pool of talent if it has a strong, clear commitment to equality and diversity, and shows this in the way it works. Staff are more likely to perform well, feel motivated and committed and stay with their employer if they feel valued and respected in their working environments.

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