Differences between the rich and the poor too stark

Oxfam analyses why the richest 1 percent has now more wealth than the rest of the world combined.

GN Bureau | January 18, 2016



Since the turn of the century, the poorest half of the world’s population has received just 1 percent of the total increase in global wealth, while half of that increase has gone to the top 1 percent. The average annual income of the poorest 10 percent of people in the world has risen by less than $3 in almost a quarter of a century; their daily income has risen by less than a single cent every year.

In a report titled ‘An economy for the 1%’, Oxfam calculates that in 2015, only 62 individuals had the same wealth as 3.5 billion people – the bottom half of humanity. This figure is down from 388 individuals as recently as 2010. Further, the wealth of the richest 62 people has risen by 44 percent in the five years since 2010 while the wealth of the bottom half fell by just over a trillion dollars in the same period – a drop of 41 percent.

In a report titled ‘An economy for the 1%’, Oxfam calculates that in 2015, only 62 individuals had the same wealth as 3.5 billion people – the bottom half of humanity. This figure is down from 388 individuals as recently as 2010. Further, the wealth of the richest 62 people has risen by 44 percent in the five years since 2010 while the wealth of the bottom half fell by just over a trillion dollars in the same period – a drop of 41 percent.

The report is based on Credit Suisse data, a global financial services company, has revealed that the richest 1 percent have now accumulated more wealth than the rest of the world put together.  Taking further the research, Oxfam, an international confederation of 17 organisations, has analysed the reasons behind this stark inequality.

Oxfam, through its report, expresses serious concern over this growing inequality in the world. Though it welcomes the fantastic progress that helped to halve the number of people living below the extreme poverty line between 1990 and 2010, it points out that had inequality within countries not grown during that period, an extra 200 million people would have escaped poverty.

The global confederation also draws attention to the findings of International Monetary Fund which had said that countries with higher income inequality tend to have larger gaps between women and men in terms of health, education, labour market participation, and representation in institutions like parliaments. “The gender pay gap was also found to be higher in more unequal societies. It is worth noting that 53 of the world’s richest 62 people are men,” says the report.

Going back to its earlier findings, Oxfam reiterates that while the poorest people live in areas most vulnerable to climate change, the poorest half of the global population are responsible for only around 10 percent of total global emissions. The average footprint of the richest 1 percent globally could be as much as 175 times that of the poorest 10 percent, the report adds.

Oxfam says that all this is largely due to the increasing return to capital versus labour. “In almost all rich countries and in most developing countries, the share of national income going to workers has been falling. This means workers are capturing less and less of the gains from growth. In contrast, the owners of capital have seen their capital consistently grow (through interest payments, dividends, or retained profits) faster than the rate the economy has been growing.”

Citing its experience with women workers around the world, from Myanmar to Morocco, Oxfam says that “they are barely scraping by on poverty wages”. “Women make up the majority of the world’s low-paid workers and are concentrated in the most precarious jobs. Meanwhile, chief executive salaries have rocketed. CEOs at the top US firms have seen their salaries increase by more than half (by 54.3 percent) since 2009, while ordinary wages have barely moved. The CEO of India’s top information technology firm makes 416 times the salary of a typical employee there. Women hold just 24 of the CEO positions at Fortune 500 companies,” says the report.

Oxfam also blames the global system of tax avoidance that has blossomed over recent decades for increasing inequality gap. It  analysed 200 companies, including the world’s biggest and the World Economic Forum’s strategic partners, and found that 9 of the 10 companies analysed had a presence in at least one tax haven. In 2014, corporate investment in these tax havens was almost four times bigger than it was in 2001.

Urging policy makers to take necessary steps, Oxfam lists down a few ways in which the economy for the 1 percent can be ended and a human economy benefitting everyone can be built. They include paying workers a living wage, promoting women’s economic equality and women’s rights, keeping the influence of powerful elites in check, changing the global system for R&D and the pricing of medicines so that everyone has access to appropriate and affordable medicines, sharing the tax burden fairly to level the playing field, and using progressive public spending to tackle inequality.

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