Society

	Grade		Grade
Jobless youth		Confidence in parliament
Disabled Income		Homicides
Elderly poverty		Burglaries
Child poverty		Assaults
Working-age poverty		Life satisfaction
Income inequality		Acceptance of diversity
Intergenerational Income mobility		Social isolation
Gender income gap		Suicides
Voter turnout

Achieving the goal that the Conference Board sets out for Canada—that of providing a high and sustainable quality of life for all Canadians—requires much more than economic success. By “high quality of life,” we mean communities that: ensure the active participation of individuals within society, including its most vulnerable citizens (such as youth and people with disabilities) minimize the extremes of inequality between its poorest and richest citizens are free from fear of social unrest and violence Outstanding economic performance does not guarantee outstanding social outcomes—the U.S. earns a "B" in the Economy report card yet receives a “D” in the Society report card. Nor are outstanding economic performance and outstanding social outcomes mutually exclusive. Two countries—Norway and the Netherlands—earn “A”s in both report cards.

Social performance is measured using 17 indicators across three dimensions:

1. Self-sufficiency
2. Equity
3. Social cohesion

1. Self-sufficiency is assessed by two indicators that measure the financial autonomy of individuals within the economy and society. For most people, employment participation is probably the most important means of achieving self-sufficiency. Canada’s relatively low unemployment rate implies that our economy is doing a good job at ensuring that people who want to work are able to do so. But the situations of two vulnerable sub-populations—youth and people with disabilities—are often masked by the overall numbers.
2. Equity has two broad dimensions: equality of outcome and equality of opportunity. Opinions on what is a “fair” or “just” distribution of resources vary widely, and it is difficult to obtain measurable and comparable information on equality of opportunity.
   
   One indicator can be seen as a measure of equality of opportunity—intergenerational income mobility. It assesses the likelihood that individuals can break out of the income class into which they are born.
   
   The remaining five equity indicators focus on equity of outcomes: elderly poverty, child poverty, working-age poverty, income inequality, and the gender income gap.
3. Social cohesion is assessed through indicators that:
   • measure the extent to which people participate in their communities (voter turnout and social isolation)
   • measure how they feel about their lives and communities (trust in parliament, life satisfaction, and acceptance of diversity)
   • report on the breakdown of community life (homicides, burglaries, assaults, and suicides)

Indicators in other performance categories also reflect levels of social cohesion, such as the unemployment rate in the Economy report card and the proportion of youth not completing high school in the Education and Skills report card.

To enlarge this report card in a new window, click anywhere on the report card.

Overall, Canada earns a “B” and ranks 9th out of 17 countries on this report card. Its position below the Nordic countries is not surprising; the Nordic countries have long outperformed Canada. But our country now also ranks below the Netherlands, Austria, Switzerland, and Belgium. Our middle-of-the-pack ranking means we are not living up to our reputation or potential.

Most Canadians seem to regard poverty as something that is an issue “over there” rather than in their own country. In the most recent World Values Survey, 58 per cent of Canadian respondents stated that “people living in poverty and need” was the most serious problem facing the world, while only 23 per cent said that poverty was the most serious problem facing Canada.¹ Yet a new study by the OECD reveals that the gap between rich and poor in Canada has widened over the past two decades, and all age groups have felt the change.² Between the mid-1990s and mid-2000s: 

• The child poverty rate increased from 12.8 per cent to 15.1 per cent;
• The working-age poverty rate rose from 9.4 per cent to 12.2 per cent; and 
• The elderly poverty rate increased from 2.9 per cent to 5.9 per cent.

The rise in child poverty is particularly disheartening. As noted by the OECD, “Failure to tackle the poverty and exclusion facing millions of families and their children is not only socially reprehensible, but it will also weigh heavily on countries’ capacity to sustain economic growth in years to come.”³

Most OECD countries have experienced an increase in poverty over the past decade, despite the fact that incomes at all levels have risen over the past two decades. Oxford Professor Sir Anthony Atkinson noted that the poverty statistics released by the OECD in Growing Unequal: Income Distribution and Poverty in OECD Countries show that “a rising tide does not necessarily raise all boats.”⁴ And, according to the OECD, in Canada, Finland, Germany, Italy, and the U.S., the gap also widened between the rich and the middle class.⁵

On a more positive note, Canada scores an “A” on intergenerational income mobility—a measure of equality of opportunity rather than equality of outcome. It measures how well children fare as adults in relation to their parents’ financial status. For example, if children born to poor parents tend to become poor adults themselves, economic mobility is said to be low. Less than 20 per cent of the income gap is passed on to children in Denmark, Australia, Norway, Finland, and Canada, while between 45 and 50 per cent is passed on to children in the U.S., Italy, and the United Kingdom. For example, in the first set of countries, if a father’s income is $10,000 less than the average, his children will become adults with income that is $2,000 less than the average; in the second set of countries, the children will grow up to have income that is $4,500 to $5,000 less than the average. In general, countries that have higher income mobility also tend to have more income equality. Canada, however, is an exception: its income mobility is better than the 17-peer-country average, but its income inequality is worse. 
 

The OECD cites three factors that have been driving changes in inequality and poverty:⁶

1. Changes in demography and living arrangements: Most OECD countries, including Canada, have experienced a reduction in average household size. This occurs, for example, when the share of people living alone or living in lone-parent households increases. As household size shrinks, economies of scale are lost and a higher income is needed to assure the same level of well-being. It also occurs if the share of people with lower-than-average income increases—such as the elderly. Both of these structural factors affected Canada’s inequality and poverty results.
2. Labour market trends: Canada has experienced increased inequality of in household incomes, mostly between middle-income and upper-income groups. Specifically, men in the middle-income groupings saw real earnings fall and both men and women in upper-income groupings experienced larger earnings growth than the middle- and lower-income groupings.
3. Government tax and transfer policies: The tax and transfer system redistributes money toward people with lower income. However, the OECD notes that “Canada spends less on cash benefits such as unemployment insurance benefits and family benefits than most OECD countries. Partly as a result, taxes and transfers do not reduce inequality by as much as in many other countries.”⁷ In addition, OECD research reveals that the tax and transfer system was less effective in reducing poverty and inequality in the 1995-2005 decade than it had been in previous decades. Net public transfers had a weaker effect in reducing poverty than in the past in most Nordic countries, Canada, and New Zealand.⁸

Governments, through the tax and transfer systems, play a large role in reducing poverty. The OECD estimates that the overall poverty rate in Canada in the mid-2000s would have been 11 percentage points higher—23 per cent rather than 12 per cent—without government tax benefits and cash transfers to low-income people.⁹ But, notes the OECD, the effectiveness of the tax and benefit has gone down over the decade from the mid-1990s to mid-2000s.¹⁰ In the mid-1990s, government taxes and cash transfers helped to reduce the overall poverty rate by nearly 14 percentage points; in other words, without this assistance, the overall poverty rate would have been 23.2 per cent instead of 9.5 per cent.

While developing countries still need to address growing inequality and poverty through the tax and benefit system, Angel Gurria, the Secretary-General of the OECD, notes that, “for most OECD countries, this approach alone is no longer going to work . . . Trying to patch the gaps in income distribution solely through more social spending is like treating the symptoms instead of the disease.”¹¹

The analysis in Growing Unequal? Income Distribution and Poverty in OECD Countries reveals that the largest part of the increase in poverty comes from changes in labour markets—not everyone has been able to take advantage of the opportunities of a high-tech globalised economy. According to Gurria, “This is where governments must act. Increasing employment is the best way of reducing poverty. . . . Thus, a key element in tackling poverty and inequality lies in creating more and better jobs.”¹² The OECD notes that “work is even more important as a way of avoiding poverty in Canada than it is in other countries.”¹³

The OECD lays out three policy areas in which governments can act:

1. Education. Better education is a powerful way to achieve growth which benefits all, not just the elites. And it is the key to upward social mobility. If access to early childhood education or to tertiary education depends on the depth of parents’ pockets, it is very hard for the child of poor parents to do well. If quality education depends on the neighbourhood where you live, this will also impact the capacity of people to improve their lives.
2. Make Work Pay. However necessary, reforms in education take a long time before their full impact is felt. In the immediate future, we need policies that address directly the increasing earnings inequality. There are a number of good examples. In-work benefits—such as the Earned Income Tax Credit in the United States, the Revenu de Solidarité Active in France and the Working Tax Credit in the United Kingdom—help reduce poverty by encouraging more people to work while, at the time, giving working families a boost in their income.
3. Tackle Child Poverty. Growing Unequal? shows that children gained less from economic growth than other groups. Poor children do not eat well, do not learn well and have low chances of escaping poverty when they grow up. This is unacceptable. The countries that do best in keeping child poverty low are those which help mothers work. Yet many families are struggling to reconcile family and work responsibilities. Services intended for children and their parents often do not reach those most in need. The OECD recently published a report called Babies and Bosses which shows how sensible investments in child care, parenting support and in promoting flexible employment can help solve this problem. These investments promise high returns and low risks, a combination which no doubt appeals even more to governments now than it did a few months back.¹⁴

The radar diagram below is a snapshot of Canada’s social performance (and the 17-country average performance) relative to that of the best-performing peer country—the outer ring—for each of the 17 social indicators.

The chart has 17 axes—one for each indicator—that radiate out from the centre. A score closer to the centre represents worse performance, while a score closer to the outer circle represents better performance.

Canada is not the top-performing country on any of the Society indicators, but it comes close on the indicator measuring the acceptance of diversity.

Compared to the 17-country average, Canada’s performance is also significantly above average¹⁵ on indicators measuring the income of people with disabilities, the elderly poverty rate, income mobility, and life satisfaction. It is significantly below average¹⁶ on child poverty, working-age poverty, income inequality, the gender income gap, voter turnout, and assaults.

The U.S. accounts for five of the worst performances (out of 17 indicators): child and working-age poverty, income inequality, trust in parliament, and homicides. Denmark, the country ranked first overall in the Society category, accounts for six of the best performances: child poverty, working-age poverty, income inequality, income mobility, gender equality, and life satisfaction.

Use the pull-down menu to compare Canada’s social performance with that of any of its peers.

Society is a category the Conference Board likes to call a “myth buster.” The self-image of Canada as kinder and gentler is based largely on a narrow Canada–U.S. comparison. Yes, Canada’s social safety net results in lower rates of poverty and income inequality, along with higher rates of self-sufficiency of vulnerable populations than in the United States. But many Canadians would be surprised to learn that U.S. assault and burglary rates are about the same as those in Canada and that the U.S. has a lower suicide rate and greater gender equity.

Self-satisfaction is also not justified when Canada’s social performance is compared with that of many of its peer countries. Eight countries rank above Canada overall, and Canada’s “D” grade on working-age poverty and “C” grades on child poverty, income inequality, and assaults are troubling for a wealthy country.

Canada has been an “A” performer in the 1990s and 2000s on four indicators: elderly poverty, income mobility, homicides, and the acceptance of diversity. The homicide “A”s come with a caveat: if the U.S. were removed from the analysis, Canada would lose its “A” grades.

Canada has been unable to improve its relative performance on several of the indicators: the consistent “C”s on child poverty and the drop to a "D" on working-age poverty are the most disheartening.

The difference in relative performance in the 1990s and 2000s can be seen in the radar diagram below.

Canada’s performance improved significantly on the income of people with disabilities—shown by the movement towards the outer ring, which represents the best-performing country on each indicator. The trust in parliament indicator also moved outward, as did the assaults indicator.

The working-age poverty, child poverty, and income inequality indicators all moved closer to the middle, meaning that Canada’s performance deteriorated relative to its peer countries.

Canada has been a steady “B” performer overall in the Society report card, ranking in the middle of the pack in the 1990s and 2000s. Canada has not been able to close the gap with the top performers. Four countries have earned “A”s over the two decades: Denmark, the Netherlands, Norway, and Sweden. The U.S. and Japan have been the worst performers in this category. Japan received “D” grades for its overall social performance despite the fact that it had very low crime rates. The U.S. has not been a top performer on any indicator, and has been below average on the majority of the indicators.

Canadians should care about social outcomes. In addition to promoting social justice, a strong social fabric ultimately contributes to sustainable economic prosperity.

¹ World Values Survey, Online Data Analysis, Website content. [online, cited September 5, 2009]. 

² OECD, Growing Unequal? Income Distribution and Poverty in OECD Countries (Paris: Author, 2008), [online, cited September 4, 2009].

³ OECD, Combating Poverty and Social Exclusion Through Work, Policy Brief (Paris: Author, 2005).

⁴ Anthony Atkinson, “Unequal Growth, Unequal Recession?” OECD Economic Observer, No 270/271 December 2008–January 2009 [online, cited September 6, 2009].

⁵ Michael Forster, “Growing Unequal: Poverty and Incomes Over 20 Years,” DELSA Newsletter Issue 7. (Paris: OECD, 2009), [online, cited September 5, 2009].

⁶ OECD, Growing Unequal? Income Distribution and Poverty in OECD Countries (Paris: Author, 2008), [online, cited September 4, 2009], p. 288.

⁷ OECD, Growing Unequal? Income Distribution and Poverty in OECD Countries—Country Note: Canada (Paris: Author, 2008), [online, cited September 4, 2009], p. 292.

⁸ OECD, Growing Unequal? Income Distribution and Poverty in OECD Countries (Paris: Author, 2008), [online, cited September 4, 2009], p. 292.

⁹ OECD, Growing Unequal? Income Distribution and Poverty in OECD Countries (Paris: Author, 2008), [online, cited September 4, 2009], p. 141.

¹⁰ Angel Gurria, “Launch of Growing Unequal? Remarks by Angel Gurria, OECD Secretary-General.” October 21, 2008. [online, cited September 11, 2009].

¹¹ Angel Gurria, “Launch of Growing Unequal? Remarks by Angel Gurria, OECD Secretary-General.” October 21, 2008. [online, cited September 11, 2009].

¹² Angel Gurria, “Launch of Growing Unequal? Remarks by Angel Gurria, OECD Secretary-General.” October 21, 2008. [online, cited September 11, 2009].

¹³ OECD, Growing Unequal? Income Distribution and Poverty in OECD Countries—Country Note: Canada (Paris: Author, 2008), [online, cited September 4, 2009], p. 292.

¹⁴ Angel Gurria, “Launch of Growing Unequal? Remarks by Angel Gurria, OECD Secretary-General.” October 21, 2008. [online, cited September 11, 2009].

¹⁵ More than 10 percentage points above the 17-country average on the normalized values for each indicator. For more information on the normalization methodology, see the Methodology section on this website.

¹⁶ More than 10 percentage points below the 17-country average on the normalized values for each indicator. For more information on the normalization methodology, see the Methodology section on this website.