The global inequality crisis is reaching new extremes, as the richest 1% now have more wealth than the rest of the world combined, Oxfam has said.
In a recent study, Oxfam revealed that the world has reached alarming levels of inequality where 62 people in the world have as much wealth as the poorest half of the global population. Oxfam uses data from Credit Suisse, a Switzerland-based multinational financial services holding company.
The report which was released ahead of World Economic Forum in Davos, Switzerland, further argued that the wealth of the world’s richest 1% is more than the other 99% combined. A notion criticized by Oxfam pointing that; “instead of an economy that works for the prosperity of all, for future generations, and for the planet, we have instead created an economy for the 1%.”
Ahead of last year’s World Economic Forum, Oxfam had predicted that the 1% would overtake the rest of the world.
In summary, the riches of those at the bottom half fell by over a trillion dollars in five years since 2010, while wealth of the 62 richest billionaires rose by over half a trillion in the same period. Oxfam noted that the wealth of the 62 today, would have been taken by 388 individuals in 2010.
So, why all the disparities, and what can be done?
“Growing economic inequality is bad for us all – it undermines growth and social cohesion. Yet the consequences for the world’s poorest people are particularly severe,” part of the report read.
According to the report, power and privilege is being used to skew the economic system to increase the gap between the richest and the rest. Additionally, a global network of tax havens further enables the richest individuals to hide $7.6 trillion.
Governments should handle tax avoidance crisis to grow their economies
“The fight against poverty will not be won until the inequality crisis is tackled,” Oxfam urged.
Tax havens and the industry of tax avoidance by the rich individuals continues to put pressure on the poor as they have to dig deeper into their pockets to pay VAT that government imposes in order to generate revenue.
“This global system of tax avoidance is sucking the life out of welfare states in the rich world,” Oxfam said. “It also denies poor countries the resources they need to tackle poverty, put children in school and prevent their citizens dying from easily curable diseases,” the company called on governments to take action to reverse the trend.
As a priority, Oxfam is calling on all world leaders to agree a global approach to end the era of tax havens.
Narrow executive rewards to minimize existing gaps
When it comes to work, the study showed that, “the gap between the average worker and those at the top has been rapidly widening. While many workers have seen their wages stagnate, there has been a huge increase in salaries for those at the top.”
Since 2009, salaries of ordinary workers barely increased, on the flip side, that of chief executive increased by more than half at least in the US firms as indicated by the report.
The CEO of India’s top information technology firm makes 416 times the salary of a typical employee there.
Oxfam feels that by having workers paid a living wage and the gap with executive rewards narrowed, the disparities currently observed can be minimized with time.
Moreover, they call for closure of the gender pay gap, compensation for unpaid care and the promotion of equal land and inheritance rights for women.
Over the years, women have been marginalized; they make up the majority of the world’s low-paid workers and are concentrated in the most precarious jobs.
Women hold just 24 of the CEO positions at Fortune 500 companies,” part of the report read.
Cost of basic commodities like health should be reviewed downwards
There is need to change the global system for R&D and the pricing of medicines so that everyone has access to appropriate and affordable medicines.
Negotiating a new global R&D treaty; increasing investment in medicines, including in affordable generics; and excluding intellectual property rules from trade agreements, will help ease the burden of the poor.
Other recommendations include: Sharing the tax burden fairly to level the playing field: by shifting the tax burden away from labor and consumption and towards wealth, capital and income from these assets; increasing transparency on tax incentives; and introducing national wealth taxes. Increasing financing for free public health and education will all help to fight poverty and inequality at a national level.
Oxfam believes that humanity can do better than this; “that we have the talent, the technology and the imagination to build a much better world. We have the chance to build a more human economy, where the interests of the majority are put first. A world where there is decent work for all, where women and men are equal, where tax havens are something people read about in history books, and where the richest pay their fair share to support a society that benefits everyone.”