Economic inequality at historic highs, rising further: UN report

Economic inequality has risen to historic high levels across various countries with over 70 per cent of the world population living in countries where inequality has grown further and these include India and China, a UN study said on Tuesday.

The World Social Report 2020, released by the United Nations amid an ongoing summit of the world's rich and powerful in this Swiss ski resort town, said the historically high levels of inequality are closing the door to a better life for millions of people as greater inequality stifles economic growth and can escalate political instability.

"Growing inequality in both developing and developed countries could exacerbate divisions and slow economic and social development," it said.

Over 70 per cent of the world's population today live in countries where inequality has grown, which include India and China, it said.

Besides, inequality is rising again even in some of the countries that have seen inequality decline in recent decades, such as Brazil, Argentina and Mexico.

The report said international inequality has declined in relative terms, but the absolute gap between the mean per capita incomes of high-and low-income countries has doubled since 1990.

In 2015, the top one per cent owned over 20 per cent of all income in 18 countries including large countries such as Brazil, India, the Russian Federation and the United States, it said.

According to the report, produced by the UN Department of Economic and Social Affairs, the impacts of inequality are being felt at the personal and national levels.

The highly unequal societies are less effective at reducing poverty, they grow more slowly, make it more difficult for people to break out of the cycle of poverty, and close the door to economic and social advancement.

On the report titled 'The World Social Report 2020: Inequality in a rapidly changing world', UN Secretary-General Antonio Guterres, who is here to attend the WEF Annual Meeting, said it has come at a time when we confront the harsh realities of a deeply unequal global landscape.

"In North and South alike, mass protests have flared up, fuelled by a combination of economic woes, growing inequalities and job insecurity. Income disparities and a lack of opportunities are creating a vicious cycle of inequality, frustration and discontent across generations," he said.

Warning that the inequality erodes trust in government, the study found that inequalities concentrate political influence among those who are already better off, which tends to preserve or even widen opportunity gaps.

"Growing political influence among the more fortunate erodes trust in the ability of Governments to address the needs of the majority," it said.

Even in countries that have fully recovered from the 2008 financial and economic crisis, popular discontent remains high and the growing inequalities are benefitting the wealthiest.

Top income tax rates have declined in both developed and developing countries, making tax systems less progressive.

The report warned that the climate change has made the world's poorest countries poorer, and if left unaddressed, it could cause millions of people to fall into poverty during the next ten years.

Besides, technological advances can also exacerbate inequality, by giving an edge to those with early access to these technologies and can widen gaps in education if they disproportionately help the children of the wealthiest.

On solutions, the report has urged to use positive examples, including concrete policy recommendations that can promote access to opportunity, macroeconomic policy focussed on reducing inequality, and tackling prejudice as well as discrimination.

The issue of inequality is figuring prominently in discussions at the WEF, which in its annual Global Risks Report has warned that the downward pressure on the global economy from macroeconomic fragilities and financial inequality continued to intensify in 2019.

Another study released here on Monday by rights group Oxfam said India's richest 1 per cent hold more than four-times the wealth held by 953 million people who make up for the bottom 70 per cent of the country's population, while the total wealth of all Indian billionaires is more than the full year budget.

Oxfam also said the world's 2,153 billionaires have more wealth than the 4.6 billion people who make up 60 per cent of the planet's population.

The report flagged that the global inequality is shockingly entrenched and vast and the number of billionaires has doubled in the last decade, despite their combined wealth having declined in the last year.