Reducing inequality: what is your country doing to tackle the gap between rich and poor?

Over the past 30 years, the gap between the rich and everyone else has worsened in many countries across the world. Since 2001, the poorest half of the population have received just 1% of the total increase in global wealth, while the richest 1% have received 50%.

Extreme inequality reduces economic growth, threatens women’s rights, and worsens health and other outcomes.  Each year, 100 million people are driven below the poverty line by having to pay for healthcare. Almost 70 million young people are working but still living in extreme poverty, surviving on less than $2 a day. Women make up the majority of the world’s low-paid workers, getting by on wages that leave them trapped in a cycle of poverty.

We believe that the inequality crisis is not inevitable and that governments have the power to defeat it. In 2015, 193 countries promised to reduce inequality as part of the Sustainable Development Goals (SDGs).

Assessing countries on their commitment to fight inequality

The Oxfam’s Commitment to Reducing Inequality (CRI) Index assesses 157 countries on their commitment and measures their efforts in social spending on essential services, taxation and labour policies. Through this tool, we aim to provide a monitoring framework that can help identify weaknesses and best practices in governments’ efforts to reduce the gap between rich and poor.

The first and most important point is that no country is doing particularly well, and even those at the top of the listings have room for improvement. Furthermore, 112 of the 157 countries included in the Index are doing less than half of what the best performers are managing to do.

Top and bottom ranked countries

Most of the countries near the top of the index are OECD countries, headed this year by Denmark.  The country has been able to achieve inequality levels that are among the lowest in the world, for instance reducing income inequality by more than 40 percent. But things are changing. The Danish economy is increasingly developing in an unequal way. The gap between the rich and poor grew by almost 20 percent in the last decade, while the government has systematically weakened redistributive policies meant to address this widening inequality.

Nigeria has the unenviable distinction of being at the bottom of the Index for the second year in a row. Its social spending (on health, education and social protection) is shamefully low, which is reflected in very poor social outcomes for its citizens. One in 10 children in Nigeria does not reach their fifth birthday, and more than 10 million children do not go to school.  Sixty percent of these are girls. The minimum wage has not increased since 2011 and social spending has stagnated.

Countries taking a U-turn on inequality

In some countries, current or recent administrations are reversing sometimes decades of progressive policies that have kept inequality levels low. In Brazil, a fiscal, economic and political crisis created space for an unpopular agenda that was pushed through by the new government between 2016 and 2018 – reversing two decades of action on inequality and social justice.

Belgium has enjoyed low levels of inequality for many years thanks to a long tradition of progressive policies. However, this system is increasingly under pressure. Regressive tax reforms introduced in 2015 lowered personal income taxes and raised taxes on consumption.  Cuts in funding for public services and social security affect everyone but the poorest are hit hardest. In 2017, over 20 percent of the Belgian population was at risk of poverty or social exclusion.

Worst performing wealthy countries

Despite being a wealthy country, Singapore is now in the bottom 10 countries in the world in terms of reducing inequality. It is particularly bad on labour where it is one of just 34 countries that don’t have equal pay laws and one of the few remaining countries that does not have a universal minimum wage. Singapore also does terribly on tax where it comes bottom in the ranking – largely because of its role as a tax haven.

The United States is the richest country in the world yet it has the highest level of inequality among major industrial countries. This is leaving tens of millions of working people impoverished – especially women and people of colour.  The US is the bottom ranking G7 country in the Index and is one of the worst performing countries in the Organisation for Economic Cooperation and Development (OECD).

Countries showing progress

Some countries have taken significant action to tackle inequality, such as South Korea. Over the past two decades the country’s inequality levels have been increasing rapidly. The income growth of those at the bottom has stagnated while the top 10 percent have seen their incomes grow to claim to 45 percent of the national income. The country has taken big steps forward since President Moon took office in 2017 and acted in all three areas measured by the Index.

Namibia remains one of the highest-ranked African countries in the Index and is fifth among the middle-income countries. Despite being one of the most unequal countries in the world, its high Index score reflects the commitment of the Namibian government to reducing inequality, particularly through its high levels of social spending (with secondary education free for all students) and some of the most progressive taxation policies.

Countries which need to go beyond

There have been some positive changes to the tax system in Colombia, but it is still clearly unequal.  Progressive moves include an increase in personal income tax rates and corporate tax rates, as well as in public health spending. However, these resources will not necessarily lead to an improvement in the quality of the services provided. The country is also one of the most unequal countries in the world on access to land - a key issue in the current peace process.

Ghana has experienced impressive economic growth over the past 20 years and has seen a significant decline in poverty - poverty levels have more than halved between 1992 and 2013. However, income inequality has been growing steadily for a number of years and are a serious threat to poverty reduction efforts.

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