Inequality

  • The widening gap between the world’s richest and poorest people is tearing societies apart. Too many still toil in extreme poverty. In contrast, wealth is increasingly concentrated in the hands of a few, who can use it to capture disproportionate power to shape the future. The widening gap between the richest and poorest is damaging economies and pushing more people into poverty. There are practical ways to close the gap.

Two sides of the same story

 
Imagine a tax haven, and you might imagine an island with palm trees, yachts and pristine white sands. Some tax havens look like this, some are less glamorous. But however they look on the surface, underneath a very different picture can be found.
 
Tax havens are at the heart of a global system that allows multinational companies and wealthy individuals to avoid paying their fair share while 896 million people worldwide are trapped in extreme poverty, and seven out of ten people on the planet now live in countries where economic inequality is worse than it was 30 years ago. Tax havens deprive governments of the resources they need to provide vital public services, like health and education, and to tackle rising inequality.
 
While the super-rich benefit vastly from this global system, its devastating impact can be felt in some of the poorest communities in the world.
 
 
Above: The Jamaica Dump, Nairobi, Kenya – April 2014
 
When we met him, Morgan said he thought he was five years old but he wasn‘t sure. He was playing at a dump in the Mukuru slum in Nairobi while his mother worked, sorting through the rubbish. The local children often come here to scavenge for food scraps, or work alongside the adults. Morgan told us he wasn‘t at school as his family couldn’t afford it.
 
It’s a huge injustice, especially when you consider that Kenya is the fastest growing economy in Africa. While some progress is being made, too many ordinary people aren’t seeing the benefit. In fact, around 34% of Kenya’s population live in extreme poverty.
 
According to the World Health Organisation, there is only around two doctors for every 10,000 people . And for the people of the Mukuru slum, even basic services like sanitation, water and education are scarce. 
 

Meanwhile...

 
In February 2015, leaked files revealed that a small number of rich individuals connected to Kenya were stowing away around $560 million in bank accounts in Switzerland. This is hidden, untaxed wealth - revenue that Kenya’s government needs to ensure that children like Morgan have a future.
 
This is just one example of a huge problem that’s happening around the world, not just in Kenya. The systemic use of tax havens by wealthy individuals and multinational companies is denying the poorest governments hundreds of billions in unpaid tax, and it’s holding back the fight against global poverty and inequality. 
 
TODAY, JUST 62 BILLIONAIRES OWN THE SAME WEALTH AS THE POOREST HALF OF THE POPULATION.
 
Every year, the gap between rich and poor gets even wider – and it’s being fuelled by the use of tax havens. As much as $7.6 trillion of personal wealth is being hidden in offshore accounts, and it has a devastating impact on poorer countries.
 
As much as 30 percent of all African financial wealth is estimated to be held offshore, costing an estimated $14 billion (approx. €12.9bn/£9.7bn) in lost tax revenues every year.
 
This is enough money to pay for healthcare for mothers and children that could save 4 million children’s lives a year, and employ enough teachers to get every African child into school.
 
 
Then there are the vast profits made by corporations and stored in tax havens. While rich individuals can hide their wealth in tax havens, multinational companies can use them to shift profits from the countries where they do business. 
 
It‘s estimated that tax dodging by multinational companies costs the world’s poorest countries at least $100 billion every year.

How the other half live

Barbara is a widow. She spends hours every day walking to collect water for her crops, so she can feed her two children. And when her husband was alive, she had to sell livestock to pay for his care. She never had the chance to go to school. If she had, she would have liked to be a nurse or a teacher. Barbara told us she felt like “a lost person”.

But Barbara knows that things could be different. If everyone paid their fair share of tax, we could have a chance to meet the basic needs of people living in poverty, give them control over their own lives and the opportunity to change their futures.
 
 

THE GENERATION TO END EXTREME POVERTY, THE GENERATION TO BUILD A FAIRER WORLD

Every day, kind and generous people are doing what they can to help change things for people facing poverty - and great strides are being made. In fact by 2030, we can end extreme poverty completely. To achieve this, we need a powerful and practical response. We need to make sure economic growth benefits the poorest people. If we’re going to end extreme poverty, we need to make sure global tax rules work for the many - not just the few. We all need to be part of the solution. And you can help right now, by signing a letter to the government calling for an end to tax havens. It’s time for change.

Did you hear the one about 62 billionaires with the same wealth as half the world?

 
When one talks about 62 billionaires on a bus with the same wealth as the poorest half of the global population, it may sound like the start of a surreal joke – a bad one, with no punchlines and no laughs, except for the privileged few. 
 
That’s because the world has become a much more unequal place and the speed of the runaway inequality bus is accelerating. 
 
Although world leaders have increasingly talked about the need to tackle inequality, and in September agreed a global goal to reduce it, the gap between the richest and the rest has widened dramatically in the past 12 months. 
 
We now have a world where 62 people – so few they would fit on a single coach – own as much as the poorest half of the world’s population. This number has fallen from 80 last year and 388 as recently as 2010.
 
 
Above: Faith is a banana farmer in Zambia, where she struggles to make ends meet. Zambia is among the top ten fastest growing economies in the world, yet despite economic growth, inequality is getting worse and most of the population are not seeing the benefits of this economic development. The number of people living below the $1.25 poverty line grew from 65 percent in 2003 to 74.5 percent in 2014. Photo: Abbie Trayler-Smith/Oxfam
 
The wealth of the richest 62 has increased by more than half a trillion dollars to $1.76 trillion (approximately €1.62/£1.22tr.). Meanwhile, the wealth of the poorer half of the world has fallen dramatically by 41% since 2010, despite the global population increasing by around 400 million people during that period.
 
These shocking statistics are highlighted in a new Oxfam report, An Economy for the 1%, which has been published ahead of this week’s annual gathering of the world’s financial and political elites at the World Economic Forum in Davos, Switzerland.
 
Oxfam’s prediction – made ahead of last year’s Davos – that the 1% would soon own more than the rest of us by 2016, actually came true in 2015, a year earlier than expected.
 
 
 
Above: Faith outside her house. Faith lives with her husband Jackson and six children (her two daughters, granddaughter, two nephews, and niece) in Chiawa, Zambia. It’s a rural area with few transport links, health centres, and employment opportunities. One of the reasons inequality in Zambia is so bad is because global tax rules allow multinational mining companies to generate vast profits from their operations in the country, whilst paying very little tax. Lost revenue is desperately needed to improve infrastructure and invest in public services. Oxfam’s research has shown that this is one of the most effective ways of tackling extreme inequality. Photo: Abbie Trayler-Smith/Oxfam
 
Poorer people are paying the price of rapidly increasing inequality. Far from trickling down, income and wealth are instead being sucked upwards at an alarming rate. 
 
Rather than an economy that works for the prosperity of all, we have instead created a global economy for the 1%. Ordinary working families are up against odds that are impossible to beat. The big winners are those at the top and our economic system is heavily skewed in their favour. 
 
Power and privilege allows the richest individuals and companies to write the rules of the economic game to avoid paying their fair share to society. An elaborate system of tax loopholes and an industry of wealth managers ensures that vast wealth stays untaxed, far from the reach of ordinary citizens and their governments. 
 
This potential tax revenue is needed to pay for vital services like schools and hospitals; the services which play a vital role in tackling inequality and escaping poverty. It means governments keep putting their hands in the pockets of ordinary taxpayers to pay for the shortfall – many of whom can least afford it.
 
 
Above: “I only manage through survival. It’s just survival,” says Barbara Chinyeu, an Oxfam-supported banana farmer in Zambia, pictured with her children 10-year-old Gertrude and Edward, aged 5. Barbara is a widow who risks her life every day by gathering water in a crocodile-infested river so she can to irrigate her crops and feed her two children. Photo: Abbie Trayler-Smith/Oxfam
 
Oxfam analysed more than 200 companies, including the world’s biggest and the World Economic Forum’s strategic partners, and has found that 9 out of 10 companies analysed have a presence in at least one of 10 jurisdictions classified by the report as the most aggressive for tax avoidance, a list that includes Ireland.
 
It is estimated that tax dodging by multinational corporations costs developing countries at least $100billion every year. Globally, it is estimated that a total of $7.6tr of individuals’ wealth sits offshore (i.e. is deposited in low-tax jurisdictions) – a twelfth of the total. If tax were paid on the income that this wealth generates, an extra $190billion would be available to governments every year.
 
Just consider how that money could help the vulnerable poor in a country such as Malawi, for example. 
 
Video below: Hear a nurse and teacher in Malawi speak about their daily challenges to help patients and pupils.
 
 

Inequality in Malawi: Health & Education

Because despite growing wealth among the urban elite over the past seven years, Malawi – one of the world’s poorest countries with seriously under-resourced health and education systems – has also seen inequality increase. 
 
As well as a crackdown on tax dodging Oxfam is urging world leaders to increase investment in public services and act to boost the income of the lowest paid. 
 
The new Oxfam report shows how women globally are disproportionately affected by inequality – of the current ‘62’, 53 are men and just nine are women. The majority of low paid workers around the world are women. 
 
Oxfam Ireland is also calling on our politicians to do more to end the gender pay gap that sees that sees women earn less than men (almost 14% in the Republic of Ireland; 12.5% in Northern Ireland).
 
It is time our politicians take note and reject this broken economic model. We cannot continue to allow hundreds of millions of people to go hungry while resources that could be used to help them are sucked up by those at the top.
 
Inequality is not inevitable. Inequality is the result of policy choices. We need our leaders to tell the 1% that the 99% and particularly those struggling to make ends meet here and overseas have had enough.
 
 
Above: Barbara carries water to her house. Photo: Abbie Trayler-Smith/Oxfam
 
Oxfam is calling for urgent action – a crackdown on tax dodging, increased investment in public services and action to boost the income of the lowest paid – to tackle the inequality crisis and reverse the dramatic fall in wealth of the poorest half of the world. 
 
Allowing governments to collect the taxes they are owed from companies and rich individuals will be vital if world leaders are to meet their new goal, set last September, to eliminate extreme poverty by 2030. 
 
As a priority, Oxfam is calling for an end to tax dodging which has seen increasing use of offshore centres by rich individuals and companies to avoid paying their fair share to society. This has denied governments valuable resources needed to tackle poverty and inequality. 
 
With 2016 being an election year throughout Ireland, north and south, Oxfam is calling on election candidates to prioritise inequality and inviting voters to join its campaign calling on politicians to tackle tax dodging, roll out universal access to healthcare and end the gender pay gap in their respective new programmes for government.
 
 
Jim Clarken is Chief Executive of Oxfam Ireland. Follow him on Twitter here.

Budget 2016 lost opportunity for real tax transparency

The Irish government’s final budget is a lost opportunity for real tax transparency needed to ensure a fair recovery for all.
 
We need to wipe out the secrecy that facilitates corporate tax dodging. Corporate tax dodging means governments keep putting their hands in the pockets of ordinary taxpayers to pay for the shortfall – many of whom can least afford it.
 
Minister Noonan announced today that Ireland will be one of the first countries to require companies operating here to declare to tax authorities how much tax they pay and where in line with new OECD recommendations. However, Ireland’s tax authorities will not have to share the information or force companies to publish their reports.
 
The government has moved in the right direction with measures announced today but missed the opportunity to show real leadership by ensuring companies publish their results so citizens are aware of exactly what they earn where, what they owe where and what they actually pay in tax.
 
18,000 people petitioned Minister Noonan last week asking him to make tax fair as part of Oxfam’s campaign against inequality. By dodging their tax liabilities, big businesses are constraining the ability of governments worldwide to tackle inequality and provide critical services. Ordinary people in rich and poor countries alike lose out as a result of tax havens, tax competition and a lack of transparent data on financial activities.
 
We recognise the government’s efforts over the past two years to deliver this action plan.  But this tax package must mark the beginning, not the end of global tax reform.  We need reforms that genuinely create an international tax system which works in the interests of the majority – not the few.
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By 2016 the top 1% will be richer than the rest of the world combined

High up in the Alps, world leaders will later this week make their annual pilgrimage to the Swiss resort of Davos for the World Economic Forum annual meeting.
 
The threat posed by growing inequality – one acknowledged by a diversity of attendees – will again be one of the main talking points at the invite-only event where politicians rub shoulders with business leaders, social entrepreneurs, technology innovator, philanthropists, media and NGOs. 
 
The summit last year identified economic inequality as a major risk to human progress, while Oxfam reported that just 85 people owned as much wealth as the poorest 50 per cent – or 3.5 billion people. 
 
Our new research paper published today shows that shows inequality is getting even worse – the exclusive club has now shrunk to just 80 people, a dramatic fall from 388 people in 2010.
 
 
Other key findings from the report – entitled Wealth: Having it all and wanting more – include: 
 
  • The richest 1 per cent have seen their share of global wealth increase from 44 per cent in 2009 to 48 per cent in 2014 
  • At this rate the richest 1% will own more than 50 per cent of global wealth in 2016. 
  • Almost all of the remaining 52% of global wealth is owned by the richest 20%. 
  • This leaves just 5.5%  of the global wealth for the remaining 80% of people in the world
  • The wealth of the richest 80 people doubled in cash terms between 2009-14.
  • More than a third of the 1,645 billionaires listed by Forbes inherited some or all of their riches.
 
This explosion in inequality is holding back the fight against global poverty at a time when 1 in 9 people do not have enough to eat and more than a billion people still live on less than $1.25 (€1.07/82p)-a-day. 
 
Inequality is not inevitable – it is the result of policy choices. There are solutions, ones we will be highlighting at the Davos meeting, which Oxfam International Executive Director Winnie Byanyima will co-chair.
 
 
Above: A twice-weekly vegetable market in the town of Bara Gaon, India. Inequality is rising at a time when 1 in 9 people do not have enough to eat and more than a billion people still live on less than $1.25 (€1.07/82p)-a-day. Photo: Tom Pietrasik / Oxfam
 
We propose a seven-point plan to tackle inequality:
 
  • Clamp down on tax dodging by corporations and rich individuals 
  • Invest in universal, free public services such as health and education
  • Share the tax burden fairly, shifting taxation from labour and consumption towards capital and wealth
  • Introduce minimum wages and move towards a living wage for all workers
  • Introduce equal pay legislation and promote economic policies to give women a fair deal
  • Ensure adequate safety-nets for the poorest, including a minimum income guarantee
  • Agree a global goal to tackle inequality.
 
 
Above: Zambia is one of the world’s fastest-growing economies yet Barbara Chinyeu is living in poverty, like three-quarters of the population. While Barbara struggles to grow vegetables to support her family and walks four hours every day just to collect water, multinational mining companies make huge amounts of money in her country. These giant corporations use international tax rules to avoid paying their fair share, meaning that families like Barbara’s lose out. "We are better off if we are all at the same level... If we were all equal, we could all have control of our own affairs." Photo: Abbie Trayler-Smith / Oxfam
 
Imagine the impact this could have. Cleaning up the toxic global tax system, to take one example, would give governments all over the world the vital revenues they have been deprived to invest in public services like health and education that can both help to fight poverty and reduce inequality. 
 
For example, the EU could receive an annual boost of €120/£100 billion in public money if Europe clamped down on tax dodging. €120/£100 billion is almost twice the annual global aid budget and this much cash could save the lives of 350,000 children under the age of five every year.
 
2015 presents a historic opportunity for world leaders to set a roadmap to eradicate extreme poverty and improve prospects for all citizens with the clock ticking for major decisions on the new UN development goals later this year. 
 
If we get it right, this generation can solve one of the major global challenges of our time and help people escape the stranglehold which keeps them in poverty.

Farmers in Madagascar taking on climate changes & land grabs

It was 8am, the coffee was strong and welcome, the small cakes, some savoury and some sweet, made of rice flour, tasty, similar to the vitumbua that are common in Tanzania. I was in the small town of Mahitsy, about 30 kms from Madagascar’s capital Antananarivo. 

Richard Rabetrano was showing me around, giving me some idea of the life and work of farmers in this part of Madagascar. We had started at the market: the essential place for farmers to sell their produce, for the exchange of goods, for meeting, for learning and of course for eating.

At the market a wide range of fresh vegetables and fruit are available as well as other food. There are also shops and traders selling farm inputs, like seeds, equipment, tools and pesticides. 

The coffee stall we stopped at is on the side of the cobbled road running through the centre of Mahitsy. We leaned on the counter and watched the busses, oxcarts, cars and above all pedestrians passing in the crowded road, many bringing goods to and from the market and the surrounding shops.

The coffee, grown, roasted, ground, sold and drunk in Madagascar was great and only cost 200 Ariary (about 6c/5p) a cup, the small cakes 50 Ariary (about 1.5c/1.17p) each. 

Photos - Top left: Marc has coffee in Mahitsy market – it costs just 6c/5p.  Top right: Fresh vegetables at the market. Middle: A husband and wife work in their field of green beans. Bottom left: Rabetrano stands in his field where both he and his neighbouring farmers have to rely on a mere trickle of water to irrigate their fields  Bottom right: It is the dry season. In this valley we can see the irrigated fields and the dry land around.

Rabetrano is a local farmer who is part of the leadership of the Eastern and Southern Africa Small Scale Farmers Forum. He and his national farmers’ confederation (Confédération des Agriculteurs Malagas) organised to get the government to allocate land and build better infrastructure for the market we were at.

Oxfam has for years supported ESAFF in its work to link up farmers from across the region, enabling the sharing of experiences and knowledge with each other and also joint advocacy for their essential interests. ESAFF has advocated for farmers, often alongside Oxfam, on issues like trade policy, climate change and land grabs.

Land grabs that in some cases have taken the land that the ESAFF members depend on for their prosperity. Rabetrano and the other farmers I met can work hard, produce crops and set up local markets, but there are policy and other decisions that can undermine all their work. 

After the market we visited farms. It is the dry season and crops are only growing in the river valleys where there is enough water. We talked to a husband and wife who were picking green beans in their field.

With carefully constructed irrigation channels these and other farmers are producing beans, peas and other legumes as well as some potatoes, tomatoes and green vegetables. The same fields will be planted with rice once the rain comes.

Rabetrano’s own fields were dry; the clay rich soil hard and empty, aside from some stalks of rice plants left from last season. “There is just not enough water this year,” he explained and showed me the trickle of water he and other neighbouring farmers have to rely on.

“Last year we had good rain and I was able to plant some land throughout the year,” Rabetrano said. Now he is waiting for the rain before ploughing and planting, rain that has become unpredictable over the last years.

Five days before there was a little rainfall and Richard had hired someone with oxen to plough land higher up the hill, but since then there has been no more rain and the soil is dry and dusty; there is no point in planting yet.

Despite the lack of water Rabetrano manages, with careful use of his 5 hectares of land, to produce food for the market and home, supporting himself and his family.

He combines different crops on the same land, sometimes at the same time, and sometimes by rotating crops, to replenish soil fertility and minimise the need for fertiliser. He farms with little environmental impact or carbon footprint.

In another village we found a vibrant cattle market, hundreds of men (yes, it was almost all men) gathered to sell and buy cows.  Alongside the field where the market was a line of small buildings contained eating houses (mostly run by women), where a busy trade was being done.

Other businesses were also there to take advantage of the market opportunities. I bought a handmade sisal rope; just in case I bought a cow and needed to lead it home. I had to explain to some of the sellers that getting a cow on the plane was going to be hard. The cattle are used for meat and milk as well as for ploughing and transport.

At Rabetrano’s neat two-floor house we had a tasty and nutritious lunch of rice (from Richard’s fields of course) and spinach with a just a few small morsels of beef mixed in. The meat a small part of this meal, just adding a bit of protein and flavour as meat has done in the diets of many throughout history.

This is not consuming meat in the way the rich of the world now increasingly do with huge environmental and sustainability repercussions.  

Rabetrano lives upstairs in the house with his wife and younger daughter (his older children have left home). His sister lives downstairs with her children. On the desk at one end of the combined living and dining room where we were sitting is a computer, the internet modem working via the cell-phone network.

The connection may be a bit slow and expensive, but Rabetrano can be in touch with fellow farmers in different parts of the world and his daughter, who is doing clothes design, can follow international fashion trends. Rabetrano also uses his smart phone to get online and Facebook has been the main way I communicate with him since returning home to Tanzania.

I had come to Madagascar to attend an Africa Forum of the International Land Coalition, which Oxfam is a member of. The Forum brought together organisations working on land rights and land governance issues across Africa to share experiences and develop approaches to ensure good land governance for sustainable development in Africa.

Over the last decades there have been improvements in land policy in many African countries. In 2009 the heads of state of all African countries, meeting in the summit of the African Union agreed on a Framework and Guidelines for Land Policy in Africa. This serves to encourage and guide countries to “Strengthen Land Rights, Enhance Productivity and Secure Livelihoods.” 

Such agreements can seem like a lot of talk with little action. Indeed there are real challenges in getting implementation of policies to make real difference in people’s lives. At the same time, however, we are seeing progress and all the organisations gathered at the Forum in Madagascar are working to make the policy commitments known to communities and to people in poverty and pushing to ensure there is implementation.

Rabetrano, like many other farmers in Madagascar, has a document from the local authority confirming his inheritance of land from his parents, but the legal strength of such documents is questionable. There are others who have no documentation at all to show their rights to the land that they depend on and need to invest in for their livelihoods.

Community practice and knowledge of which land belongs to whom continues to be important for people’s sense of tenure security, whether people have documents or not, but this can be hard to defend when there are large government or private investments.

Land reforms in 2005 aimed to give citizens in Madagascar stronger rights over their land and set up a more affordable process for those with land rights to get a proper certificate documenting that right. This has increased the sense of security on their land, for those who have got the certificate.

There are challenges, however, with only a limited number of the certificates issued. Rabetrano has not got one yet, and most of those issued have gone to relatively wealthy people. Although the law calls for gender equality, men are still seen as the owners of land with the result that over 80% of land held by couples has been certified in the name of the man alone.

Large-scale land grabs are a real threat that increases the need for secure land rights and strong organisation of people aware of and able to defend their rights. One land grab in Madagascar involved over a million hectares of land, but was eventually cancelled after protests.

So strong where people’s objections that the deal contributed to the overthrow of the president. Other land grabs continue and as investors seek to profit from the rich natural resources of the country they are too often threatening not only the livelihoods of farmers, like Rabetrano, but also the vibrant markets and other local economic activities that the local agriculture is a central part of.

The area I visited with Rabetrano is in the wealthier highlands of the country, close to the capital city, which means market opportunities and easier access. Not all farmers are as well situated; indeed Madagascar is ranked 155 on the United Nations Development Programme Human Development Index and does have extreme poverty.

What has been good to see is what farmers like Rabetrano can do when the conditions are right. Rabetrano is creating a good quality of life for his family and contributing to the economy. His children have got an education and are having greater choices about what kind of future they want.

This cannot be taken for granted though; the right conditions need to be extended to other farming areas and also defended from the real threats posed by climate change, bad trade deals and land grabs.

Marc Wegerif is a South African, currently based in Tanzania, who has worked on development and human rights issues in a range of organisations for over 25 years and has a Masters in Land and Agrarian Studies from the University of the Western Cape. Marc has focused on land rights issues for much of his professional life and is currently Food and Land Rights Advisor with Oxfam Ireland. In this role Marc is involved with international advocacy and running several multi-country projects. He is married with two daughters. This blog is a personal reflection and the views expressed are not necessarily those of Oxfam. 

 

 

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