Over a quarter of a billion more people could fall into extreme poverty this year

Over a quarter of a billion more people could fall into extreme poverty this year

Rising global food prices alone could push 65 million more people into extreme poverty, Oxfam estimates

Over a quarter of a billion more people could fall into extreme levels of poverty in 2022, a new brief from Oxfam reveals today. This is as a result of COVID-19, rising global inequality and food price increases supercharged by the war in Ukraine. 

“First Crisis, Then Catastrophe”, published ahead of the World Bank and IMF Spring Meetings in Washington DC, shows that 860 million people could be living in extreme poverty — on less than €1.75 ($1.90) a day — by the end of this year. This is mirrored in global hunger: the number of people without enough to eat could reach 827 million in 2022.

The World Bank had projected COVID-19 and worsening inequality would add 198 million people to those facing extreme poverty during 2022, reversing two decades of progress. Based on research by the World Bank, Oxfam now estimates that rising global food prices alone will push 65 million more people into extreme poverty, bringing the total to 263 million more this year — equivalent to the populations of the UK, France, Germany and Spain combined.

Jim Clarken, CEO of Oxfam Ireland, said: “Without immediate collective action, we could be witnessing the most profound collapse of humanity into extreme poverty and suffering in memory. The triple threat of COVID-19, rising inequality and skyrocketing food prices is having a devasting impact on the world’s poorest and most vulnerable.

“As many people now struggle to cope with sharp cost-of-living increases, having to choose between eating or heating or medical bills, the likelihood of mass starvation faces millions of people already locked in severe levels of hunger and poverty across East Africa, the Sahel, Yemen and Syria. One woman from Akobo in South Sudan, told us, “This is just too much. I am tired of living”.

The brief notes that a wave of governments is nearing a debt default and being forced to slash public spending to pay creditors and import food and fuel. The world’s poorest countries are due to pay $43 billion in debt repayments in 2022, which could otherwise cover the costs of their food imports. Global food prices hit an all-time high in February, surpassing the peak crisis of 2011. Oil and gas giants are reporting record-breaking profits, with similar trends expected to play out in the food and beverage sector. 

People in poverty are being hit harder by these shocks. Rising food costs account for 17 percent of consumer spending in wealthy countries, but as much as 40 percent in Sub-Saharan Africa. Even within rich economies, inflation is super-charging inequality: in the US, the poorest 20 percent of families are spending 27 percent of their incomes on food, while the richest 20 percent spend only 7 percent.

In Ireland, we are witnessing the effects of these price shocks not only in people’s protests against fuel prices, but in a wider cost of living crisis that Social Justice Ireland has characterised as forcing people to make “unavoidable trade‐offs” in Reasonable Living Expenses (RLEs).

For most workers around the world, real-term wages continue to stagnate or even fall. The effects of COVID-19 have widened existing gender inequalities too — after suffering greater pandemic-related job losses, women are struggling to get back to work. In 2021, there were 13 million fewer women in employment compared to 2019, while men’s employment has already recovered to 2019 levels.

The report also shows that entire countries are being forced deeper into poverty. COVID-19 has stretched all governments’ coffers but the economic challenges facing developing countries are greater, having been denied equitable access to vaccines and now being forced into austerity measures.

Despite COVID-19 costs piling up and billionaire wealth rising more since COVID-19 than in the previous 14 years combined, governments — with few exceptions — have failed to increase taxes on the richest. An annual wealth tax on millionaires starting at just 2 percent, and 5 percent on billionaires, could generate $2.52 trillion a year —enough to lift 2.3 billion people out of poverty, make enough vaccines for the world, and deliver universal healthcare and social protection for everyone living in low- and lower middle-income countries.

In Ireland, Oxfam has proposed an even more modest wealth tax to the Commission on Taxation and Welfare, at rates of 1.5% and 2% levied only on net wealth held above EUR 4.3 million, which could bring in revenues of over €4 billion.

Clarken said: “We reject any notion that governments do not have the money or means to lift all people out of poverty and hunger and ensure their health and welfare. We only see the absence of economic imagination and political will to actually do so.

“Now more than ever, with such scale of human suffering and inequality laid bare and deepened by multiple global crises, that lack of will is inexcusable. The G20, World Bank and IMF must immediately cancel debts and increase aid to poorer countries, and together act to protect ordinary people from an avoidable catastrophe. The world is watching”.

Oxfam is calling for urgent action to tackle the extreme inequality crisis threatening to undermine the progress made in tackling poverty during the last quarter of a century:

  • Introduce a fair and sustainable rate of wealth tax in Ireland to fund the recovery from this economic crisis and a just transition to carbon neutrality. Argentina adopted a one-off special levy dubbed the ‘millionaire’s tax’ that has brought in around $2.4 billion to pay for pandemic recovery.
  • End crisis profiteering by introducing excess profit taxes to capture the windfall profits of big corporations across all industries. Oxfam estimated that such a tax on just 32 super-profitable multinational companies could have generated $104 billion in revenue in 2020.

  • Cancel all debt payments for developing countries that need urgent help now. Cancelling debt would free up more than $30 billion in vital funds in 2022 alone for 33 countries already in or at high risk of debt distress.

  • Boost aid and pay for Ukrainian assistance and the costs of hosting refugees with new funding, rather than shift aid funds earmarked for other crises in poorer countries.

  • Reallocate at least $100 billion in Special Drawing Rights (SDR), without burdening countries with new debt or imposing austerity measures. The G20 promised to deliver $100 billion in recycled SDRs but only $36 billion has been committed to date. A new SDR issuance should also be considered and distributed based on needs rather than countries’ quota shares at the IMF.

  • Act to protect people from rising food prices, and create a Global Fund for Social Protection to help the poorest countries provide essential income security for their populations, and maintain these services in times of severe crisis.

ENDS

CONTACT: Alice Dawson-Lyons | alice.dawsonlyons@oxfam.org | +353 83 198 1869

Notes to editors

Download Oxfam’s briefing “First Crisis, Then Catastrophe”.

Download Oxfam Ireland’s submission to the Commission on Welfare and Taxation.

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