Pyramid, egg, diamond, or onion?

According to a report by the Trades Union Congres, Britain is now an onion-shaped society – with a few at the top, a bulge of people below the middle and fewer at the bottom.

Bascially, during the last 40 years, two trends are identified: the rise of a small group of super-rich and a greater concentration of the population in the bottom half of the income distribution range.

Specifically, the income distribution has become increasingly positively skewed, as the mean net household income in 2007 stood at £463 a week, 23 per cent higher than the median (£377 a week).

It has long been argued that the globalization has promoted the the shift to outsourcing. The low cost of offshore workers have enticed corporations to buy goods and services from foreign countries. The laid off manufacturing sector workers are forced into the service sector where wages and benefits are low, but turnover is high . This has contributed to the deterioration of the middle class which is a major factor in the increasing economic inequality in the western countries. Families that were once part of the middle class are forced into lower positions by massive layoffs and outsourcing to another country. This also means that people in the lower class have a much harder time climbing out of poverty because of the absence of the middle class as a stepping stone.

The primary beneficiary of globalization was the developed countries Consumer with lower prices. It is now apparent that the lower prices came at the cost of a deteriorating standard of living and middle class. The rotation of jobs into “new and better jobs” has not materialized and is not apparent.

This will certainly have important implications for the evolution of the international trade policy in western countries, especially during the downturn of global economy. The historically strong development pace of globalization in the past 60 years might moderate or even decelerate in the near future as a result of the deteriorating economy conditions in the western countries and the driving forces of the uncomfortable middle class, who might now stand up to claim back their lost benefits...