Scotland Performs
Purpose Targets
Purpose Target: Solidarity
This national indicator is currently being reported on the new national performance website and can be found here: https://nationalperformance.gov.scot/measuring-progress/national-indicator-performance
To increase overall income and reduce income inequality by 2017
Between 2015 and 2016, total income received by Scottish households increased from £96.8 billion to £98.5 billion. In 2016/17, the ratio of income to the top 10% compared to the bottom 40% decreased from 138 to 121 in the previous year.
Last Update: 27 June 2018
Why is this Purpose Target important?
What will influence this Purpose Target?
What is the Government's role?
How is Scotland performing?
Criteria for recent change
Tackling income inequality is important for a range of reasons. It is important for the economy, because international evidence suggests that increased income inequality can be detrimental to a country's economic performance. It is important for society, because more equal societies tend to be more cohesive. It is important for individuals, who want to be treated fairly and be able to fulfil their potential.
The Scottish Government's Solidarity Target has two elements - the level of total income received by Scottish households in the most recent year; and the ratio of the incomes of the top 10% of households, compared to those of the bottom 40%. This ratio is known as the 'Palma Ratio' and is an internationally comparable measure, which compares how income is shared between those at the top and those at the bottom of the income distribution.
Scotland's Economic Strategy sets out the ambition for Scotland to rank in the top performing quartile of OECD countries in terms of having the lowest levels of inequality. To allow for an assessment of progress towards this ambition, the Scottish Government in conjunction with the First Minister's Council of Economic Advisers took forward a stream of work to advise on an appropriate internationally comparable measure of income inequality. The Council supported the use of the 'Palma ratio' to monitor progress in this area. An assessment of Scotland's ranking against OECD countries, for the most recent year for which data is available, can be found below.
Income inequality is influenced by several factors, including:
Accessibility of sustainable employment opportunities, especially for those on lower incomes
Improving the earnings of those on lower incomes, for example through the Scottish living wage
Opportunities for the lower-paid to improve their skills and achieve progression
Changes in the income differential between the lowest and highest paid occupations
Entitlement to, and take-up of, benefits especially for those who are unable to take up employment.
The Government influences solidarity in a number of ways. These include:
Investing in education: a focus on giving every child a strong start in life, as well as in school education, enabling them to gain the skills they need to succeed . Differences in early education and school quality are the most important components contributing to persistent inequality across generations.
Expand opportunities for current and future workers: create jobs through targeted employment programs and public investments in infrastructure, and improve Scotland's infrastructure, including transport connections to maximise employment opportunities.
Sustainable economic development: promoting sustainable employment through improving the quality of employment that pays, creating a skilled workforce, and supporting the conditions for all to contribute to Scotland's sustainable economic growth.
Invest in human capital: expanding access to high-quality and affordable childcare and early education; creating pathways to good jobs such as apprenticeships; and ensuring access to further and higher education for all.
Effective government: to support local employability partnerships to help more people into work through delivery of effective services that meet their needs.
Total income received by Scottish households increased every year from 1999 to 2016. Between 2015 and 2016, it increased from £96.8 billion to £98.5 billion (in 2016 prices).
Source: ONS Gross Disposable Household Income
The data for this chart is available at the bottom of the page.
The picture is more mixed in terms of income inequality over time, as shown in the chart below: when the level of the Palma Ratio rises, income inequality can be said to be increasing; when it falls, income inequality can be said to be decreasing.
Following a gradual decline to its lowest point in 2004/05, income inequality then increased to 2008/09. Income inequality then decreased in 2010/11 and remained relatively stable until 2014/15 before increasing sharply in 2015/16 and decreasing in 2016/17 to a value slightly above the previous stable level.
Source: Department for Work and Pension's Family Resources Survey, Households Below Average Income datasets
In 2012, Scotland ranked 19th out of 34 OECD countries where estimates of income inequality were available.
The data for the OECD rankings is available at the bottom of the page.
The evaluation is based on:
Performance is improving if the ratio of income to the top 10% compared to the bottom 40% decreases by 5 percentage points or more and the total income does not fall;
Performance is worsening if the ratio of income to the top 10% compared to the bottom 40% increases by 5 percentage points or more, or if total income falls;
The position is maintaining in any other case.
For information on general methodological approach, please click here.
Scotland Performs Technical Note
Statistics Topic Page
View Purpose Target Data
Solidarity [XLSX, 30.4 kb: 07 Aug 2018]
Page updated: Monday, January 28, 2019