Gap between high and low earners widens

The income gap between the highest and lowest earners in Sweden has widened since the mid 1990s, while average disposable incomes have also gone up, according to a new report from Statistics Sweden.

The gap between people on low incomes and people on high incomes had narrowed between 2000 and 2003, after getting larger during the nineties. In 2004 and 2005, however, the income gap started to widen again.

In 1995, the lowest-earning ten percent of Swedish households had average disposable incomes of 53,000 kronor per year. By 2005, that figure was 70,900 kronor, a rise of 33.6 percent. The highest earning ten percent of Swedish households had average disposable incomes of 261,900 kronor in 1995. This figure had reached 429,000 kronor by 2005, a rise of 63.8 percent.

The top five percent of Swedish households saw disposable income increase even more during the period. From having an average disposable income of 314,100 kronor in 1991, people in this group saw the figure jump 63.8 percent to 565,300 by 2005.

An increase in income from capital was a major reason for the increase in incomes for the better off. Increased house prices and the strong performance of the stock market have given high-income Swedes a boost. The increase in income from capital benefited high earners most. Yet even without taking income from capital into account, the gap between high and low earners increased between 1995 and 2005.

Foreign-born people had lower disposable incomes than people born in Sweden, and the gap has increased since the early 1990s. Then, foreign-born people resident in Sweden had a ten percent lower disposable income than Swedes. The gap had increased to 18 percent in 2005.

People coming from western countries, however, had similar disposable incomes to Swedes. The average income of people born in non-western countries was 25 percent lower than Swedes in 2005. The study noted that foreigners’ average income increased the longer they had been in Sweden.