Inequality trapping hundreds of millions in extreme poverty

More than 200 million people will be trapped unnecessarily in extreme poverty - despite world leaders’ pledge to end it - unless action to tackle economic inequality is accelerated, according to an Oxfam paper published today.

World leaders will promise to eradicate extreme poverty by 2030 at a UN summit later this week. While applauding this, Oxfam also warns that the global goals for sustainable development, due to be agreed at the summit, will be impossible to meet without policies enabling the poorest to benefit most from economic growth.

Oxfam’s report, "Inequality and the End of Poverty", uses projections by World Bank economists to demonstrate how, even using optimistic assumptions about global growth, 200 million people will be trapped unnecessarily in extreme poverty by 2030 unless poor people’s incomes grow faster than those of the rich. People living in extreme poverty have an income of less than $1.25-a-day.

The findings follow Oxfam’s report published in January which showed that unless rising inequality is checked, by next year, the richest 1 per cent will own more wealth than the rest of the world’s population combined.

Winnie Byanyima, Executive Director of Oxfam International said: “We can eradicate extreme poverty - but to do this we must tackle the growing gap between the richest and the rest. Extreme economic inequality has trapped hundreds of millions of people in a life of hunger, sickness and hardship.”

“Wealth does not automatically trickle down to those who need it most. It’s up to politicians to ensure everyone gets a fair share of the benefits of growth.” 

Oxfam’s report welcomes the historic success that saw poverty levels reduced by half between 1990 and 2010, but demonstrates how rising inequality in many countries prevented even greater progress. If developing countries had managed growth so that the income of the bottom 40 per cent of their populations grew two percentage points faster than the average, worldwide poverty rates could have been as low as 5.6 per cent in 2010 – around a third of the actual poverty rate of 16 per cent. This could have resulted in 700 million more people escaping a life of extreme poverty, between 1990 and 2010.   

Oxfam is calling for action in three areas: clamping down on corporate tax dodgers that cheat developing countries out of billions of dollars each year, investing in public services so that everyone has access to a decent education and healthcare, ensuring decent jobs with decent wages, and fair deals for small farmers and others who survive by selling the fruits of their labors.

Byanyima added: “The last 15 years has seen the fastest reduction in poverty in human history. Almost a billion people escaped extreme poverty – equivalent to the combined population of North and South America.  This staggering achievement demonstrates what can be achieved when there is the political will. If world leaders demonstrate the same will to tackle inequality we can end extreme poverty in the next 15 years.”

G20 finance ministers meeting in Lima next month can help scale up the fight against corporate tax dodging by backing collective international action to make multinational companies pay their fair share of tax in all the countries where they do business. The G20 should support calls from developing countries for the establishment of a new global tax body which will bring all countries together to reform the global tax system.