Extreme inequality — the gap between the rich and the poor — is rising and threatening to undo the progress made in tackling poverty over the past 25 years. It also poses a growing threat to global security and economic growth.
Now, the richest 1 per cent now have more wealth than the rest of the world combined. The global inequality crisis is reaching new extremes.
- Just 8 individuals have the same wealth as 3.6 billion people, the bottom half of humanity. This is down from 388 as recently as 2010.
- The rich are becoming richer: the richest are accumulating wealth at such an astonishing rate that the world could see its first trillionaire in 25 years.
- The poor are becoming poorer: between 1988 and 2011, the income of the poorest 10 per cent increased by just US$65, while the incomes of the richest 1 per cent grew by US$11,800 - 182 times as such.
- Women are disproportionately affected by inequality: it will take 170 years for women to be paid the same as men.
Inequality is widespread in the world: seven out of 10 people live in a country that has seen a rise in inequality in the last 30 years.
So what’s causing inequality?
It’s a complex picture but some of the key drivers of economic inequality are:
- A shift in what’s valued in many countries – there’s been a greater financial return placed on money and assets (capital) than on work, wages for the top earners. In almost all developed and most developing countries, share of national income going to workers is falling. By contrast, the already wealthy have benefited from a rate of return on capital via interest payments, dividends, etc., that has been consistently higher than the rate of economic growth.
- Individuals and firms who have the capital using their power and position to have the rules changed in their favour. And tax havens are a big part of the problem. Tax havens deprive governments of the resources they need to provide vital public services, like health and education, and to tackle rising inequality. Developing countries lose around $100 billion every year because of corporate tax dodges involving tax havens. In 2014, Africa lost $14 billion dollars in lost taxes due to wealthy Africans using tax havens. This missing money is enough to pay for healthcare in Africa that could save 4 million children’s lives and employ enough teachers to get every African child in school.
Oxfam calls for a fundamental change in the way we manage our economies so that they work for all people, and not just a fortunate few. Oxfam’s report outlines a blueprint for a more human economy which requires corporations and high incomes to pay their fair share of tax, workers are paid a decent wage and ensure economies work for women.
Download Oxfam’s latest report：
Story tells how inequality hurts
(Photo: Abbie Trayler-Smith/Oxfam)
Barbara is from Zambia – one of the top ten fastest growing economies in the world. But like 64% of the country, Barbara lives in extreme poverty. She lost her husband to cancer, and had to sell livestock to pay for his treatment. She has to walk four hours every day to collect water for her crops, and her son doesn’t go to school because she can’t afford the registration fees. Countries like Zambia are losing vital tax revenue which could pay for better health centres, schools and roads because multinational companies can hide vast profits in the secret global network of tax havens.