The top 20 percent of the population earn about four times as much as the bottom 20 percent.
Income inequality increases in good economic times as well as bad, Thursday's report from the global watchdog said. "Put simply: rising inequality is bad for long-term growth," the OECD concluded in its report, In It Together, Why Less Inequality Benefits All.
An increase in income inequality between 1985 and 2005 knocked 4.7 percentage points off cumulative growth between 1990 and 2010 on average across a range of its 34 member countries, the OECD said.
The problem is particularly acute in the US: Between 2008 and 2013, real average household disposable income at the top 10 percent rose 10.6 percent, while in the bottom 10 percent it fell 3.2 percent, the OECD said.
Policies to improve women's treatment in the labour market and measures to reverse the growing share of low-quality, "dead-end" jobs are key to reducing income inequality and unlocking more economic growth, the report noted.
Temporary jobs surge
The report also found that an increase in ‘non-standard jobs' - self-employed, part-time or temporary work - has led to more inequality.
In Austria around 70 percent of non-standard workers are women - and the number of non-standard jobs has increased dramatically during the past six years - far outstripping the growth of standard employment.
Although part-time, temporary and self-employed jobs can provide a better work-life balance and higher life satisfaction, “non-standard workers... tend to receive less training and, in addition, those on temporary contracts have more job strain and have less job security than workers in standard jobs. Earnings levels are also lower in terms of annual and hourly wages,” the OECD says.
Non-standard jobs are also associated with precariousness and poorer labour conditions when non-standard workers are exempt from the same levels of employment protection and fringe benefits that colleagues on standard work contracts get.
People are more likely to be poor or in the struggling bottom 40 percent of society if they have non-standard work.
The OECD calls for government action to improve the prospects of lower-skilled workers in the labour market: “The focus must be on policies for quantity and quality of jobs; jobs that offer career and investment possibilities; jobs that are stepping stones rather than dead ends.”