personal finance

Middle class WARNING: Those earning between £20k and £55k face ‘ROCKY’ future – OECD

The numbers of those in the middle class category, which the OECD defines as households with income between 75 and 200 percent of the average salary, has slowly declined over the years as families struggle to maintain their lifestyles. Roughly 58 percent of the adult population are considered to be middle class, someone who is paid between £20,670 and £55,120. In its report, which is based on data from its 36 member nations, the OECD shows around 70 percent of baby boomers – born between 1942 and 1964 – were considered to be part of middle-income households in their 20s. This has now dropped to 60 percent of millennials – born between 1983 and 2002 – belonging to the middle class in their 20s.

The decline, which raises concerns for the financial future of millions of workers, was being blamed on stagnating earnings and soaring prices of living.

Over the last 30 years, median incomes rose a third less than the average income of the richest 10 percent.

Meanwhile, households are forking out more for key pillars of middle class life including private healthcare, housing and education.

At the same time, workers have faced growing job insecurity, made worse by a rise in Artificial Intelligence technology.

The OECD claim robots now threaten one in six middle class jobs.

More than 20 percent of middle class households spend more than they earn, leaving them increasingly turning to debt to finance their lifestyles.

OECD head Angel Gurria said in a statement: “The middle class used to be an aspiration.

“It meant the assurance of living in a comfortable house and affording a rewarding lifestyle.

“It was also a basis from which families aspired to an even better future for their children.

“However, there are now signs that this bedrock of our democracies and economic growth is not as stable as in the past.

“The middle class looks increasingly like a boat in rocky waters.”

The OECD has called for investment in training to boost earnings potential for the middle class.

The group also suggested shifting the tax burden from labour income to income from capital and capital gains, property and inheritance, while also making income taxes more progressive.


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