Income inequality has accelerated since the pandemic, says Oxfam. Here’s how to bridge the gap

This article is brought to you thanks to the collaboration of The European Sting with the World Economic Forum.

Author: Andrea Willige, Senior Writer, Forum Agenda

• The inequality gap is widening, with more than two-thirds (69%) of global wealth held by developed nations, while less than a third can be found in the developing world.
• Women and minorities are also disproportionately affected by growing income inequality.
• The World Economic Forum’s Future of Growth Report 2024 proposes a new scorecard for assessing growth and aligning it with wider goals around inclusiveness and sustainability.

The gap between rich and poor is widening rather than receding and 60% of people in the world have grown poorer – equating to almost 5 billion people. This is according to a new paper from Oxfam, the UK-based charity, which looks at the extreme ends of income distribution around the globe.

Global wealth is concentrated in the Global North

Oxfam reports that global income inequality has grown for the first time in 25 years. This is defined as the gap between the Global North – the world’s developed, high-income countries mostly situated in the northern hemisphere – and the Global South, which describes developing and least-developed countries largely found in the southern hemisphere.

When it comes to wealth distribution, more than two-thirds (69%) of global wealth is held by the developed nations, while less than a third can be found in the developing world.

The world’s richest people and their share of wealth are also highly concentrated in the developed world. The top 1% now own 43% of all global financial assets. At the same time, Oxfam says, only 0.4% of the world’s largest and most influential companies are committed to paying staff a living wage – that is remuneration that enables people “to afford a decent standard of living”.

Women and minorities at the thin end

The paper highlights that 4.8 billion people have become poorer than they were in 2019, with women, racialized and marginalized communities bearing the brunt of this development.

The authors point to Black households in the US, whose wealth is typically less than 16% of that of a white household. Similarly, in Brazil, the average income of white people is 70% higher than that of descendants of African lineage.

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Women have some of the poorest-paid and least secure jobs, and continue to face a high gender pay gap, says Oxfam. Work undertaken by women is often seriously undervalued. The statistics also reveal that men own $105 trillion more than women – equivalent to more than four times the size of the US economy.

Adding to this is the high share of work undertaken by women in care and domestic work that goes unpaid. Women’s unpaid work in care alone is worth $10.8 trillion annually to the economy, Oxfam says, three times the size of the global technology sector.

COVID-19 reversed 30 years of progress on inter-country equality. Image: United Nations

The pandemic as a turning point for income inequality

Oxfam’s report, along with other research, points to the pandemic as a major turning point for the increase in income inequality.

Up until the COVID-19 pandemic, the incomes of the poorest 40% in the world had been growing faster than the respective national averages in most countries monitored, according to the 2023 United Nations’ Sustainable Development Goals (SDG) Report.

However, the trend was reversed in 2020, leading to the largest rise in income inequality between countries in three decades. Based on available data, the UN gauges inequality to have risen 4.4% between 2019 and 2020 alone.

Inequality had notably narrowed prior to the COVID-19 pandemic. Image: United Nations

This also tallies with the World Economic Forum’s Future of Growth 2024 report.

It highlights a gap in inclusiveness between high-income economies – with a growth score of 69 – and low-income economies with less than half that score (30). Upper and middle-income economies sit between the two extremes. The report’s authors conclude that there is a strong correlation between levels of per-capita income and inclusion outcomes.

This trend had been evident for some time, the Forum states, but became more pronounced with the compounding impact of the pandemic, rising inflation and the cost-of-living crisis.

Finding solutions to income inequality

With only around one-tenth of the SDG for eradicating inequality achieved to date, the question remains as to which strategies might be deployed to close the gap.

Oxfam’s paper calls for governments to take a proactive role in shaping their economies to boost equality. It proffers that this can be achieved through a mix of measures. These include:

• Guaranteeing public services such as healthcare, education, care and food security known to address inequality
• Investment in public infrastructure and services
• Better governance of the public sector to ensure greater accountability and transparency
• Strengthening laws for gender and racial justice
• Improving business governance to avoid corporate power and wealth becoming too large
• Capping CEO pay while protecting payment of a living wage
• Creating more effective corporate tax regimes and ensuring enforcement
• Offering proactive support for sustainable, equitable business models through taxation and other incentives.

Oxfam says it supports the idea that “every nation should aim for a situation in which inequality is reduced to the point where the bottom 40% of the population have around the same income as the richest 10%”.