Reducing inequality: what is your country doing to tackle the gap between rich and poor?

Setting up water points, Central African Republic - Covid-19 response

In the Central African Republic, the Covid-19 represents a health crisis which is added to an already alarming humanitarian crisis. One in two people in need of humanitarian assistance, and about 70% of health services are provided by humanitarian organizations. Photo: Aurelie Godet/Oxfam

The coronavirus pandemic has swept across a world that was already profoundly unequal. The failure to tackle inequality has left the majority of countries far more vulnerable and unprepared for both the health and economic impacts of the disease.

Millions of people have died or been pushed into hunger and poverty because governments have not invested in public healthcare, protected workers’ rights, or provided safety nets for people who can’t work.

Women, who generally earn less, save less and hold insecure jobs, have been particularly hard hit by the lockdowns introduced in response to the pandemic while unpaid care work and gender-based violence have increased dramatically.

Assessing countries on their commitment to fight inequality

The Commitment to Reducing Inequality Index (CRII) ranks 158 governments on their policies on public services, tax and workers’ rights, three areas pivotal to reducing inequality and weathering the COVID-19 storm.

The index highlights that no country in the world was doing enough to tackle inequality prior to the pandemic. It shows that only 26 out of 158 countries were spending a recommended 15 percent of their budgets on health, and in 103 countries at least one in three workers lacked basic labor rights and protections, like sick pay, when the virus struck. This is helping to fuel the crisis and has increased the vulnerability of people living in poverty, especially women.

Those at the top

Most of the countries near the top of the 2020 CRI Index are OECD countries. With higher gross domestic products, they have much more scope to raise progressive tax revenues; likewise, they have greater scope to spend those revenues on public services and social protection.

But even the top-performing countries could do much more – especially as many of them have been backtracking for decades on policies that reduce inequality like progressive taxation.

Norway

Norway tops the index, notably scoring top on labor rights. It has the sixth lowest income inequality in the world but since 2000, has cut its top personal income tax and corporate tax rates sharply, so that taxes now play a lower role in reducing inequality. The country ranks as the 9th biggest corporate tax cutter in the world. Overall inequality and poverty have risen during the last decade, and 15 OECD countries perform better than Norway on wealth inequality.

Denmark

For the past two decades, successive governments in Denmark have promoted taxation policies that have increased inequality, challenging the historically low levels of inequality within the population. Since 2010, income growth has stagnated for the 40% with the lowest incomes, while the richest 10% now own nearly half of the country’s total wealth. Furthermore, the decrease in spending on education as a redistributive measure to address widening inequality is alarming. The new Danish government elected in 2019 is, however, expected to reverse some of these negative trends.

Some countries may not score as highly on the overall index but are clearly taking steps to reduce inequality, despite their relatively low incomes.

Sierra Leone

Sierra Leone has built on its commitment to make secondary education free by increasing education spending this year. The government has clamped down on tax evasion by mining companies and has introduced a property tax in the capital, Freetown. It has also increased its minimum wage, although this applies only to the small proportion of workers who are formally employed.

Vietnam

Since the 2018 CRI Index, Vietnam has increased its health spending, although it must do even more to reduce health inequalities and the significant amount ordinary people need to pay for the cost of healthcare. Vietnam’s tax collection is strong, especially compared with other countries in the region, but it could still do more to eliminate tax incentives for corporations. Its score on labor rights remains low, but if it implements the recent welcome agreement to allow workers to form their own independent labor unions, this score will improve.

In the informal settlement of Mukuru (Nairobi, Kenya), members of the Mukuru Youth Initiative, an Oxfam partner, paint a mural about the importance of social distancing.

In the informal settlement of Mukuru, in Nairobi, Kenya, members of the Mukuru Youth Initiative, an Oxfam partner, paint a mural about the importance of social distancing.

Kenya, which had ranked highly (9th) on progressive tax policies, has responded to the coronavirus crisis with tax cuts for the wealthiest and big business and negligible additional funding for social protection and health measures.

Nearly two million Kenyans have lost their job and tens of thousands of people living in Nairobi’s slums and in the countryside have received almost no help from the government and are struggling to feed themselves.

Photo: Jaric Mwambela/Mukuru Youth Initiative

Those at the bottom

Very low spending on public healthcare, weak social safety nets and poor labor rights mean these countries are woefully ill-equipped to deal with COVID-19.

South Sudan

At the bottom of the index is South Sudan, which comes close to last on all three pillars. This low ranking reflects a failure of policy setting by the government for its citizens: for instance, South Sudan spends six times more on the military and on debt servicing than it does on vital public services, and it collects only around 15% of the tax that it should. This leads to failure to deliver on even the most basic of services: less than one-third of the country’s people can access essential health services.

Nigeria

Nigeria is second to last in the index, just ahead of South Sudan. Nigeria continues to collect shockingly low levels of tax, and it therefore also ranks very low on public services; it is hardly surprising, then, that one in five out-of-school children in the world live in Nigeria. During the coronavirus crisis, hit by a collapse in oil revenues, the government has halved its health and education budgets.

If COVID-19 has been a wake-up call for some countries, others have failed to act with disastrous consequences.

United States

The United States ranks last out of the wealthy G7 countries and trails 17 low-income countries like Sierra Leone and Liberia on labor legislation due to anti-union policies and a very low minimum wage. The index’s findings compound Oxfam’s broader concerns that the pandemic landed on a healthcare system that excludes millions of people living in poverty, which most affects Black and Latinx communities ― only 1 in 10 Black households has health insurance compared with 7 in 10 white households.

India

India, which is currently experiencing one of the world’s fastest-growing outbreaks of COVID-19, was among the world’s worst performing countries in tackling inequality going into the pandemic. India’s health budget is the fourth lowest in the world and only half of the population has access to even the most basic healthcare services. Several state governments have used COVID-19 as a pretext to increase daily working hours from 8 to 12 hours a day and suspend minimum pay legislation, devastating the livelihoods of millions of poor workers now battling hunger.

Inequality is not inevitable, it is a political choice.

Tackling health and economic inequalities should be a key part of governments’ COVID-19 response. Inequality is not inevitable, it is a political choice. Governments must adopt strong anti-inequality policies on public services, tax and labour rights, to radically reduce the gap between rich and poor.

They must learn the lessons of this pandemic and seize this opportunity to build fairer, more resilient societies and a better tomorrow for us all.