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Global Inequality – the unjust and unsustainable gap between countries and within them

Posted by Deborah Hardoon Deputy Head of Research

3rd Nov 2014

6 year-old Hamida Cyimana, is writing on the blackboard used by her father who is a teacher while waiting for him to come home. Kigali, Rwanda. (Credit: Simon Rawles)

Extreme inequality isn't simply an issue of income; it is also one of opportunities and access to resources - much of which can be determined by where you are born. Following the launch of Even It Up, Deborah Hardoon explains why it is vital that responsibility for this growing inequality is dealt with on a national level.

We all want to be better off and many people living in poverty desperately need to be. To get there, we may think that we can just print more money and that all of us can keep growing and consuming indefinitely, but ultimately we are dependent upon a planet with finite resources.  As such, how we distribute these resources between ourselves really matters if we are to ensure that between us, we all have enough to eat but that we also do not exceed our planetary boundaries.

A woman in Japan can expect to live to 87, while a woman in Sierra Leone has a life expectancy of just 46

Currently, the global distribution of pretty much everything is massively skewed; economically, socially, politically and environmentally. The average income of everyone that is working is $23,948 (1), or roughly $65 a day, a pretty comfortable income. The average income of everyone in the world is a more modest $10,514 (2), about $29 a day. However, in reality, the global average income is meaningless for most people. Approximately 1 billion people live on less than $1.25 per day, while at the same time the 3 million people that make up the top 1% of Americans earn more than 35 times the average, at $850,000 (3) per year. In terms of wealth, the distribution is even more unequal. 

In January, Oxfam calculated that 85 people have the same amount of wealth as half of the population on the planet. Socially, specific groups continue to be excluded and marginalized around the world, because of their gender, ethnicity, disability, sexual orientation, the list goes on. Politically, access to information, voice and political influence is not granted to all people equally around the world, and environmentally the people that are most vulnerable to the effects of climate change had the least to do with causing it.

The inequality of opportunity


Much of the difference in opportunities and outcomes in life is determined by the country in which you are born.  The variation between countries is enormous. A woman living in Japan can expect to live to 87 years old, while a woman living in Sierra Leone has a life expectancy of just 46. Luxembourg has an average income per person that is 490 times that of Malawi. To address this, aid must continue to flow from rich countries to poor ones, the global debates on trade, climate finance and tax avoidance must be accelerated and agreements reached that address the current imbalances of money, power and influence between countries, which leave developing countries worse off. But while we recognize the huge gulf that exists between different countries in terms of human rights and wellbeing, some progress has been made in reducing the gap between rich countries and poor countries.  Developing nations on average are growing faster and catching up with the developed world, poverty rates have been cut in half.

Socially, specific groups continue to be excluded and marginalized around the world

At the same time however, disparities between the rich and the poor are increasing within countries. In fact, within country inequality has risen so much that despite the gains from poverty reduction and the growth rates of developing countries, the world is just as unequal today as it was thirty years ago. Data on country level inequality finds that 7 out of 10 people live in countries where the gap between the rich and the poor in their country has increased. Thomas Piketty has become a household name from exploring data on income and wealth that illustrates this trend.

As low and middle-income countries grow people are being left behind, trapped in chronic poverty often due to exclusion and marginalization, dependent on jobs that are precarious and low paid. Meanwhile, in these same countries, powerful elites, the owners of land and capital and those with political connections are getting richer. India has seen a 10-fold increase in the number of $ billionaires in the last decade. During the same period India looks set to fail its MDG on hunger, with an estimated one in three children undernourished in 2013. 

The richest man in Africa, Alike Dangote has amassed a fortune of $22.9bil (as of 17th October 2014), while almost half the population of Nigeria remain below the poverty line. Inequalities of income coexist with marginalization and discrimination within countries and communities, giving rise to vast differences in wellbeing. In Ethiopia, whilst 88% of relatively rich, urban males attended school, just 31% of rural females can expect to. When the distribution of income, opportunities and access are disproportionately enjoyed by the wealthy, at an increasing rate, the path to ending extreme poverty becomes so much slower.


Not just a low-income issue

The global financial crisis continues to impact ordinary people, with approx. 1 in 4 people in Spain unemployed

In developed countries the rich and the poor are moving further apart too. In the OECD, people in the poorest 10% of the population tended to loose more or gain less than the top 10% in the years following the global financial crisis, pushing them further behind. In the US, 95% of the post-financial crisis growth was captured by the richest 1%, while the bottom 90% got poorer. In Spain, Amancio Ortega, the world 4th richest man increased his fortune by $7bil between March 2013 and March 2014 from $57bil to $64bil (October 2014), even as the aftermath of the global financial crisis continues to impact ordinary people, with approximately 1 in 4 people in Spain unemployed.

So while we have long recognized the disparities of income and wellbeing from one country to the next, gross economic, social, political and environmental injustices will persist if we do not address with urgency the extreme and growing levels of disparity within our own countries. Oxfam's Even It Up campaign launched last week  and draws attention to this pressing concern. But the antidotes are also within our grasp. At the national level, governments are in a position to level the playing field, to provide the universal health and education services to all citizens and to fund this through progressive taxation. Governments can take steps to eradicate exclusion and better regulate markets to benefit the many rather than the few. It is critical that countries take responsibility for growing inequality within their borders if we are to all live in a just and sustainable world. 

Notes:
1 2013 estimates, in 2005 $. Thanks to Laurence Chandy for spotting an error in the original blog which stated that this was the average GDP of everyone in the world. And thanks to social media for allowing the error to be spotted and fixed so quickly. The GDP of every person in the world is approximately $11k or nearer $15 in PPP.

2 GDP per capita, current US$, 2013, World Bank 

2012 estimates, in 2005 $, calculated using -14.9% inflation

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Blog post written by Deborah Hardoon

Deputy Head of Research

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Deborah Hardoon