3 key actions to help bridge the inequality gap

• According to the UN Secretary-General, reducing inequality is one of the worst performing Sustainable Development Goals.The inequality crisis undermines any chance we have to secure human progress and planetary survival.Here are three urgent actions that can help bridge the widening inequality gap.

Rosa is a 33-year-old mother of two living in Madrid, Spain. She describes her life as surviving, rather than living. Amid the pandemic and cost-of-living crisis, she alongside hundreds of millions of people are struggling to keep up with the rising cost of living. For meals, her family eats only what she can afford to buy; and during winter, she has embraced alternatives such as using blankets, warm robes, and flannel pyjamas to keep the cold at bay. She does not turn on the heating in her apartment because she would not be able to afford the gas bill. She reflects that “there is only one way for the rich to stay rich and that is for you, me and everyone else to stay poor.”

We are living through times of unprecedented hunger, driven by steep rises in the cost of basic goods, while millions also reel from the impacts of climate change. We have seen extreme poverty increase for the first time in 25 years. Yet, a select few are clear winners. The very richest have become dramatically richer and corporate profits have hit record highs, driving an explosion of inequality.Our free-market economic model that prioritises profits for the richest few at all costs is increasingly making our world riskier and fragile. From the informal settlements of Kibera in Kenya, Dharavi in Mumbai to Neza in Mexico; to the poorest neighbourhoods of London and New York, obscene riches are sitting side by side with abject poverty and suffering.

Urgent action is needed to reduce inequalities

In the Sustainable Development Goals Progress Report 2023, the UN Secretary-General noted that SDG10 – reducing inequality – is one of the worst performing SDGs. Action has never been more urgent on this goal, because during the COVID-19 pandemic and global inflation crisis, inequality of income, wealth and health outcomes has risen sharply. This is true within countries, and between them. Poorer countries lacked finances to support incomes of the poor or confront COVID-19, and for the first time in three decades the gap between the rich world and the rest is growing again.The gap between rich and poor is rapidly increasing, and economic inequality has reached unacceptable levels:

• Since 2020, the richest 1% have captured almost two-thirds of all new wealth – twice as much money as the bottom 99% of the world’s population.122 million more people went to bed hungry in 2022 than in 2019, while food and energy companies doubled their profits in 2022, transferring $257 billion to their wealthier shareholders.Over a billion workers lost $746 billion in real pay in 2022, while rich shareholders saw their dividends reached a record high of $1.56 trillion, a 10% jump compared to 2021.

We know that extreme inequality undermines all our social and environmental goals. Multiple studies have shown that extreme inequality corrodes our politics, destroys trust, constrains our collective economic prosperity, and weakens multilateralism. We also know that without a sharp reduction in inequality, the intertwined goals of ending poverty and preventing climate breakdown will be impossible to achieve.This inequality is not inevitable; it is the result of policy choices.We are at a tipping point, and it is not too late to do the right thing. We have the necessary tools and the means to reverse this catastrophe. And there is a clear case for this: reducing inequality would enable us to live within our planetary boundaries, end poverty, consolidate our democracy and achieve SDGs.We know the proven policies that can make this happen. Policies like taxing wealth and high incomes, providing universal public services like health and education, ensuring social protection for all and fair wages for workers. All of these can drive progress in reducing the gap.This is a call to action for a common good. And we must answer that call with these three actions:

1. Reduce income inequalities between top and bottom earners

Every nation should agree to aim for a situation where the top 10% do not earn more than the bottom 40%. Without this concrete end point, we lack the direction because we do not know the destination.

2. Measure inequality to monitor progress on SDGs

We need to use concrete proven measures of inequality to monitor progress. In its current form, the current shared prosperity indicator which is the main tracker of SDG 10 falls far short of what is required. It measures the bottom, but not the top, which means it does not measure inequality. Evidence shows that one in five countries showing a positive trend in shared prosperity simultaneously saw inequality, and the incomes of the top 10% rise. We must use other proven measures, such as the Gini coefficient and the Palma ratio. And we should measure not just inequality of incomes, but inequality of wealth, which is far higher.

3. Invest in inequality data to inform decision making

We need to invest in a revolution in inequality data. New advances in inequality data need to be adopted to enable high-level analysis by every government. This will be the only way to ensure broad political consensus for the transformation our economies must make to a zero-carbon future.

Policy interventions are crucial

By doing these three things, we can make a huge difference. Around the world, inequality is making a mockery of the hopes and ambitions of billions of the poorest people. Without policy interventions in the interests of the many, this cascade of privilege and disadvantage will continue for generations.