Is there inequality in the world? How much? The number of employed people and many well-being indicators have improved compared to the past, according to OECD. But does this mean we’re following the right direction? Let’s find out.
Reward work, not wealth: the inequality gap between the rich and the poor
The way the world and our lives are organized is changing fast. Still, we keep living on an unequal, unbalanced and unfair world. While the rich and more powerful keep getting wealthier, the poor and more vulnerable aren’t protected. That’s one of the many straightforward conclusions of Oxfam’s Reward work, not wealth report.
Oxfam is an international confederation of 20 NGOs networked together in over 90 countries. A global movement for change focused on building a prosperous future that’s free from poverty. In their report, the organization gives insights about harsh inequalities taking place on a global scale. The paper also focuses on how the global economy is promoting the accumulation of wealth, how this impacts workers and what causes it.
The paper also examines gender inequality and the little reward that people with dangerous and insecure jobs get. The current economic model, often described as laissez-faire, together with decision-makers who don’t “walk their talk” are also criticized for perpetuating the gap between the rich and the poor. The report ends suggesting governments and international institutions need to act to end inequality. They must design a fairer economy that better-redistributes money and develops more human policies.
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The rich and the poor – is there inequality today?
Reward work, not wealth is an attempt of showing that we’re not living in an even world. According to the report, the world’s billionaires 2017 wealth would have been enough to end extreme poverty seven times over. In fact, 82% of all growth in global wealth in 2017 went to the richer top 1%. As for the bottom 50% of the world’s population, during the same period, well… they saw no increase at all. As well, the world’s 42 richest people own the same wealth as the poorer 3.7 billion people. Big numbers, right?
Focusing on data from some specific countries we can also tell that a CEO in the US earns the same as an average worker makes during a whole year. In South Africa, the richer top 10% get 50% of all wage income and in Nigeria, the richest man earns enough interest in 1 year to lift two million people out of extreme poverty. In Indonesia, for instance, the 4 richest men own more wealth than the bottom 100 million people.
The report also speaks on the rise of precarious and temporary works. These often mean workers get lower wages, fewer rights, and less access to social protection. And they’re dangerous too – every 11 seconds a worker dies because of occupational accidents or work-related diseases. Oxfam also discusses what they call “modern slavery”. They present it as today’s low and unfair wages that sometimes aren’t enough for people’s survival. Their point is that having a job doesn’t necessarily mean escaping poverty. In fact, the International Labour Organization says nearly 1/3 of workers in developing countries live in poverty. But what is causing all this mess?
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What causes inequality? Why is there a gap between the rich and the poor?
“The economic justification for inequality is that it provides incentives for innovation and investment. We are told that billionaires are the ultimate demonstration of the benefits of talent, hard work and innovation and that this benefits us all. Yet there is growing evidence that the current levels of extreme inequality far exceed what can be justified by talent, effort and risk-taking.”
The authors stand out the fact that inequality is also a result of inheritance, monopoly, and networks. In fact, they say that around two-thirds of billionaire wealth can be explained by the combination of these 3 factors. They also discuss how private interests manipulate public policies to strengthen existing monopolies and create new ones. And they go even further. They criticize the richest, accusing them of increasing their fortunes by tax dodging and hiding their money (specifically, over $7.6 trillion) in tax havens such as the ones exposed by the Panama Papers.
In the end, according to Oxfam, the conclusion is that rich people having more power and people in the bottom having fewer perks is the main reason for all this inequality. The rich and most influential people will get the best opportunities first. And the “poor” will have to wait for the opportunities they have left. At the same time, companies are nowadays are under great pressure as they must give back to shareholders a higher return on their investment. Pushing employees’ working schedules and decreasing their salaries and perks is a way of getting there. As well, the development of automation systems is also empowering company owners while increasing the pressure on workers who get afraid of losing their job. So what’s the solution to close this gap between the rich and the poor?
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How to close the inequality gap between the rich and the poor?
So how can we turn around this inequality paradigm? According to Oxfam, by regulating and carefully managing the economic markets. This way, global wealth would get to be “equality” distributed. The authors defend their point of view with the International Monetary Fund’s recent interventions to fight the world’s economic crisis. They talk about how letting the globals markets operating freely made inequality rise, together with risk and uncertainty.
Oxfam’s report begs for a new vision of globalization. They desperately ask for public and private decision-makers to interfere and create barriers and regulations. Such could be, for instance, that the richer top 10% don’t get a bigger wealth than the poorer 40%. Following these and other changes, workers would increase their bargaining power. Monopolies would break up. And tax havens would cease to exist. At least, there’d be an opportunity for technological developments to benefit the majority. And all this would foster a fair and equal wealth distribution among citizens, the authors say.
But for this to happen, according to the report, governments and international institutions need to recognize the impacts of the current economic model on the poorer. Only afterward they’ll be willing to redesign the current economic model. Such restructuring could be, according to Oxfam, to ensure that poverty wages, slavery and precarious and dangerous work are not seen as morally acceptable. Or limiting shareholders returns by comparison to an average employee’s pay. Eradicating tax havens and creating special taxes for billionaires are other suggested actions. As for companies, a no dividends if there’s no living wage policy or the representation of different stakeholders on boards are pointed out as desirable changes too.
Acting today for a better tomorrow
In the end, with all this data, it gets hard not to admit we live in a world that needs progress. That’s perhaps why the sustainable development goal (SDG) number 10 – reduce inequality among countries – exists. Maybe in our jobs or by the people we meet, we can create awareness or effective progress on this issue. Will it then be easier for future generations to accept yesterday’s reality if they know we (really) tried hard to change it?
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Image credits to inequality gap on Shutterstock, rich-poor on Shutterstock and inequality on Shutterstock
