Scotland
Income inequalities
Key points
- Except for those in the top and bottom tenths of the income distribution, households with below-average incomes have enjoyed bigger proportional increases over the last decade than households with above-average incomes. In terms of the extra money, however, three-quarters has gone to those with above- average incomes and a quarter has gone to those in the richest tenth.
- The poorest tenth of the population have, between them, around 2% of Scotland's total income and the second poorest tenth have 4½%. In contrast, the richest tenth have 27% and the second richest tenth have 15%. The income of the richest tenth is around the same as the income of all those on below-average incomes (i.e. the bottom five tenths) combined.
- The overall distribution of income has changed little over the last decade.
- Most of these proportions are similar in Scotland as for Great Britain as a whole, as is their lack of change over time. The main exception is the richest tenth which has a somewhat smaller share of the total income in Scotland than in Great Britain as a whole: 27% compared to 30% (see the UK indicator on income inequality). For this reason, income inequality in Scotland is somewhat lower than in Great Britain as a whole.
- One of the Scottish Government's targets is "to increase the proportion of income earned by the three lowest income deciles as a group by 2017". This implies a shift of focus, to include the third decile alongside the lowest two (in effect, the 'poverty' focus). This shift of focus alters the weights of the different population groups because the third decile is very different from the first two. In particular, in this third decile, around one third are pensioners, about twice the proportion in the lowest two deciles. Furthermore, only around one sixth (children and adults together) belong to workless, working-age families, compared with nearly a half in the bottom two deciles. In summary, therefore, any widening of focus to cover all the bottom three deciles implies a greater weight (a) for pensioners and (b) for lower income, working families than would be the case if the focus remains exclusively on 'poverty'.
Graph 1: Changes in real income (percentages)
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Graph 2: Changes in real income (shares)
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Graph 3: Total income (over time)
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Graph 4: Total income (shares)
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Graph 5: Income levels
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Graph 6: Composition by income level
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Definitions and data sources
The first two graphs focus on the change in real incomes by income decile whilst the third and fourth graphs focus on the share of total incomes by income decile.
The first graph shows the average percentage change in real (i.e. after adjusting for inflation) incomes for each income decile over the period 1996/97 to 2006/07.
The second graph shows the shares of the total change in real incomes since 1996/07 by income decile.
The third graph shows the share of the total income of the population for selected income deciles (tenths), namely the two poorest deciles and the two richest deciles. Clearly, the shares added up for all ten deciles would total 100% of the total income.
The fourth graph shows, for the latest year, the distribution of total income across the ten income deciles.
The fifth graph shows the income of households at the 10th and 90th percentiles of the income distribution as proportions of average (median) Scottish income. For comparison purposes, the equivalent figures for Great Britain as a whole are also presented.
The sixth graph shows how composition of the population varies by household income decile. For each of the ten deciles, the shares of the population are shown separately for children, working-age adults and adults of pensionable age, with the data for children and working-age adults further divided into those where no one in the family works and those where at least one of the adults in the family works. To improve its statistical reliability, the data is the average for the latest three years.
The data source for all the graphs is Households Below Average Income, based on the Family Resources Survey (FRS). Income is disposable household income after deducting housing costs, equivalised (adjusted) for household size and composition. The self-employed are included in the statistics.
Overall adequacy of the indicator: medium. The FRS is a well-established annual government survey, designed to be representative of the population as a whole, but the sample sizes in the first graph are relatively small and the coverage does not extend beyond the Caledonian Canal.