Growing economic inequalities across the world

Recently, the Oxfam has released a report, entitled “Report Work, Not Wealth”, on the growing inequality crisis across the world. As per the report, the richest 1% bagged 82% of wealth created in 2017, while the 3.7 billion people who make up the poorest half of the world saw no increase in their wealth. The report caused widespread debate about the reasons behind the concentration of wealth across the world, including Bangladesh.

To prepare the report, over 70,000 people were surveyed in 10 countries, including Bangladesh, across five continents. These countries represent over one-quarter of the world’s population and more than a third of the world’s GDP.

Key findings of the Oxfam report are as given below. 

• Billionaire prosperity has risen by an annual average of 13% since 2010. It is six times quicker than the wages of conventional workers, which have risen by a yearly average of just 2%.

• The number of billionaires rose at an extraordinary rate of one every two days among March 2016 and March 2017.

• It takes just four days for a CEO from one of the top five global approach brands to earn what a Bangladeshi garment worker will earn in her lifetime.

• In the USA, it takes slightly over one working day for a CEO to earn what an ordinary worker makes in a year.

• Last year saw the major growth in the number of billionaires in history, one more every two days. At present, there are 2,043 dollar billionaires worldwide and nine out of ten are men.

• In 12 months, the prosperity of this elite group has augmented by USD 762bn. This is enough to end dangerous poverty seven times over.

• While billionaires in one year saw their riches grew by USD 762 billion, women provide USD 10 trillion in unpaid care annually to support the global budget.

• Almost 43% of the global youth labour force is still either unemployed, or working but breathing in deficiency.

• More than 500 million young people are living on less than two US dollars a day.

• In developing countries, it has been estimated that 260 million young people are not in employment, education or training.

• Temporary, precarious work is the norm in developing countries, and is on the rise in rich nations. Temporary employees have lower wages, fewer rights and less access to social protection.

Oxfam’s report outlined the key factors driving up rewards for shareholders and corporate bosses at the expense of workers’ pay and conditions. These factors are erosion of workers’ rights, the excessive influence of big business over government policy-making and the relentless corporate drive to minimize costs in order to maximize returns to shareholders.

Women workers often find themselves off at the bottom of the heap. Across the world, women consistently earn less than men and are usually in the lowest paid and least secure forms of work. By comparison, 9 out of 10 billionaires are men.

To remedy the situation, the Oxfam report has urged the governments across the world to initiate the following measures.

• Limit returns to shareholders and top executives and ensure all workers receive a minimum ‘living’ wage that would enable them to have a decent quality of life. For example, in Nigeria, the legal minimum wage would need to be tripled to ensure decent living standards.

• Eliminate the gender pay gap and protect the rights of women workers. At current rates of change, it will take 217 years to close the gap in pay and employment opportunities between women and men.

• Ensure the wealthy pay their fair share of tax through higher taxes and a crackdown on tax avoidance, and increase spending on public services such as health care and education. Oxfam estimates a global tax of 1.5% on billionaires’ wealth could pay for every child to go to school.

• The Oxfam report also suggested to build a human economy. There are two important ways to achieve a human economy - designing economies to be more equal from the start and using taxation and public spending to redistribute and create greater fairness.

Sector wise recommendations to curb inequalities are as given below.

For Governments

• Set concrete, time bound targets and action plans to reduce inequality

• End extreme wealth

• Work together to achieve a revolution in inequality data

• Implement policies to tackle all forms of gender discrimination

• Recognize and protect the rights of citizens and their organizations to freedom of speech and association

• Incentivize business models that prioritize fairer returns

• Limit returns to shareholders and promote a pay ratio for companies’ top executives

• Eliminate slave labour and poverty pay

• Promote the organization of workers

• Eliminate precarious work and ensure all new forms of employment respect workers’ rights

• Publicly commit to achieving universal free public services and a universal social protection floor

• Refrain from directing public funding to incentives and subsidies for healthcare and education provision by for-profit private sector companies and expand public sector delivery of essential services

• Call for a new generation of international tax reforms and Eradicate the use of tax havens and increase transparency

For Corporations

• Refrain from rewarding shareholders through dividends or buybacks or paying bonuses to executives and the highly paid until all their employees have received a living wage

• Companies should ensure worker representation on boards and remuneration committees

• Share profits with the poorest workers

• Publish the company’s pay ratio between CEO and median pay, and commit to reducing this ratio to at least 20:1

Oxfam report with respect to Bangladesh

• The richest 1% cornered 73% of the total wealth generated in the country in 2017. Whereas, 67 crore population, who comprise the country’s poorest half saw their wealth rise by only 1%.

• In 2017, the wealth of Bangladesh’s richest 1% increased by over BDT 20.9 lakh crore. This amount equivalent to the total budget of the Union Government in 2017-18.

• As per the Oxfam report, it will take 941 years for minimum wage workers in rural Bangladesh to earn what a top paid executive at a leading Bangladeshi garment firm earns in 2017.

• The report has urged the Bangladesh government to ensure that the country’s economy works for everyone and not just the fortunate few.

• It also asked the government to promote inclusive growth by encouraging labor-intensive sectors, effectively implementing social protection schemes and investing in agriculture.

• In Bangladesh, those living on $2 a day have a mortality rate three times the global average. More than 50% of wage employees are earning less than the minimum wage in the garment sector.

• In Bangladesh, respondents thought that the Chief Executive Officers (CEOs) in private corporations are unduly rewarded and they should take a 60% pay cut.

Conclusion

It is high time the policy makers across the world should address the issue of concentration of wealth and growing economic inequalities. It is not only in the interest of the public at large, but also necessary to sustain the legitimacy of the bureaucracy and the political executive.

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