Eighty-two percent of wealth generated last year across the world went to the richest one percent of the global population, while the 3.7 billion people who make up the poorest half saw their wealth flatline, according to a new Oxfam report published today as political and business elites gather in Davos for the World Economic Forum.
Reward Work, Not Wealth sets out how the very biggest gains were made by billionaires. Oxfam said it was unacceptable and unsustainable for our economies to continue to enable a super-rich minority to accumulate vast wealth while hundreds of millions of people struggle to survive on poverty pay. It called for a rethink of legal and business models that prioritise shareholder returns over broader social impact.
A global problem, the wealth gap also exists in Wales where approximately 16 per cent of the country’s wealthiest people have as much wealth as everyone else put together, and 23 percent of households are living in relative poverty. Relative income poverty rates are higher in Wales (23.5%) than in England (21.6%) or Scotland (18.6) and research shows that the gap has widened since the 2007/2008 financial crisis.
Oxfam has previously identified the role of tax dodging in driving inequality. This year its report highlights how the excessive corporate influence on policy-making, erosion of workers’ rights and relentless drive to minimise costs in order to maximise returns to investors all contribute to a widening gap between the super-rich and the rest.
Billionaire wealth rose by an average of 13 percent a year between 2006 and 2015 – six times faster than the wages of ordinary workers. It takes just four days for a CEO of one of the world’s five biggest fashion retailers to earn as much as a Bangladeshi garment worker will earn in her entire lifetime.
Women consistently earn less than men and are concentrated in the lowest-paid, least-secure forms of work. At current rates of change it will take 217 years to close the global gap in pay and employment opportunities between women and men. Women are also missing out in Wales, where 80 percent of all part-time jobs are held by women and 75 percent of these jobs are in retail, administration, personal services and other typically low paid occupations. Women in Wales are also more likely to live on a persistent low income; 22 percent compared with 14 percent of men. On current rates, it
will take 100 years to close the gender pay gap in Wales.
Oxfam has heard from women in Vietnamese garment factories whose low wages force them to live apart from their children, women in the US poultry industry who wear nappies because they are denied toilet breaks, and women working in hotels in Canada and the Dominican Republic who stay silent about sexual harassment for fear of being fired.
Kirsty Davies-Warner, Head of Oxfam Cymru, said: “Something is very wrong with a global economy that allows the one percent to enjoy the lion’s share of increases in wealth while the poorest half of humanity miss out. The concentration of extreme wealth at the top is not a sign of a thriving economy but a symptom of a system that is failing the millions of hard-working people on poverty wages who make our clothes and grow our food.
“The world has made huge strides forward in ending poverty but progress could be even faster if we did more to break down the barriers that are holding back the world’s poorest people. The lack of a Living Wage is one obvious barrier. Here in Wales, nearly a quarter (24.9%) of workers are paid less than the voluntary Living Wage of £8.75 an hour based on the cost of living, and women in part-time role employment represent 63% of all women earning less than this Living Wage. For work to be a genuine route out of poverty we need to ensure that ordinary workers across the globe
receive a Living Wage and can insist on decent conditions, and that women are not discriminated against. If that means less for the already wealthy then that is a price that we – and they – should be willing to pay.
“What can be done in Wales? We believe the Welsh Government should take strong action on low pay and commit to paying the Living Wage to all their staff, both within government and workers in those companies that provide services to the Government. They could also ensure all public bodies in Wales become Living Wage employers. These steps, alongside public investment in childcare would even it up for women and help reduce inequality in Wales.”
“Across the world, leaders should ensure that wealthy individuals and businesses pay their fair share of tax by cracking down on tax avoidance, and invest this into essential services like schools and hospitals, and creating jobs for young people.”
Improved data has led to an upward revision of Oxfam’s annual estimate of how many people own the same as the poorest half of humanity, although the trend of widening inequality remains. Now, 42 people own the same wealth as the poorest 50 percent. In its latest Global Wealth Report Credit Suisse expanded its dataset. Using this new data, Oxfam now calculates that last year 61 people owned the same as half the world. As recently as 2009, the figure was 380.
A new survey of 70,000 people in ten countries, including the UK, demonstrates huge support for action to tackle inequality. Nearly two-thirds of people – 72 percent in the UK – say they want their government to urgently address the income gap between rich and poor in their country. In the UK, when asked what a typical British CEO earned in comparison to an unskilled worker, people guessed 33 times as much. When asked what the ideal ratio should be, they said 7:1. In some sectors the reality can be very different. FTSE 100 bosses, for example, earn on average 120 times more than the
Davies-Warner added: “Many leaders say they’re worried about the corrosive effect of inequality but their tough talk too often fades away at the first resistance. Some companies and wealthy individuals are taking steps towards fairer ways of doing business but too many others use their power to protect their own interests. To really transform our economies, we need to look again at the business models and laws that prioritise shareholder returns above wider social benefit.
“We know that inequality disproportionately affects women and that their experience of poverty is different to men’s, therefore it is crucial that the Welsh Government listens to women about their experiences when developing programmes aimed at reducing inequality and poverty. Investing funds raised from taxation in programmes to tackle poverty will only be successful if we ensure that they are designed to directly benefit women.”
Tax avoidance by businesses and wealthy individuals is estimated to cost developing countries and poor regions $170 billion a year – money that could be used to fight poverty and provide public services. In the UK, Oxfam is urging the government to help fight tax dodging by using its upcoming Sanctions and Anti-Money Laundering Bill to ensure that Britain’s overseas territories publish the owners of companies incorporated on their shores. The Paradise Papers revealed the key role that UK-linked tax havens such as Bermuda play in facilitating global tax avoidance.
Pay inequality in numbers:
- In 2017 it took just three days for the UK’s top bosses to make more money than the typical UK full-time worker will earn all year, according to The High Pay Centre.
- In Nigeria, the legal minimum wage would need to be tripled to ensure decent living standards.
- In the 12 months to March 2017, billionaires’ fortunes grew by a staggering $762 billion [£585 billion] – enough to end extreme poverty more than seven times over.
Notes to editors:
Reward Work, Not Wealth will be published online. The report includes case studies of workers around the world interviewed by Oxfam about their pay and conditions.
See the report and methodology note for more information about Oxfam’s statistics.
Calculations are based on global wealth distribution data provided by the Credit Suisse Global Wealth Data book 2017. The wealth of billionaires was calculated using Forbes’ billionaires list last published in March 2017.
The real increase in global wealth between July 2016 and June 2017 was $9.2 trillion [£7.3 trn], of which $7.6 trillion [£6 trn] (82 percent) went to the top one percent of the population and the remainder to the rest of the top 20 percent.
The top five largest publicly listed apparel retailers (excluding department stores) by sales are listed on the 2017 Forbes Global 2000 list of The World’s Biggest Public Companies.
Oxfam uses World Bank data to calculate how much it would cost to raise the income of everyone living in extreme poverty to above $1.90 a day. This is only one measure – ending poverty will require a range of actions.
RIWI and YouGov conducted the online survey of 70,000 people in ten countries: India, Nigeria, United States, United Kingdom, Mexico, South Africa, Spain, Morocco, Netherlands and Denmark. In the UK 3,016 adults were surveyed online and the sample size for the control group was 1,004 adults. Fieldwork was undertaken between October and November 2017. The figures are representative of all GB adults (aged 18+).
The High Pay Centre has calculated ratios for UK CEO to worker average wages.
The UN estimates that tax avoidance by businesses costs developing countries $100bn a year. Economist Gabriel Zucman estimates that the world’s poorest regions – Africa, Asia and Latin America – lose $70bn in annual revenue due to wealthy individuals’ use of tax havens.
The Sanctions and Anti-Money Laundering Bill is expected to reach Report Stage in the House of Commons in March. Oxfam is urging the government to accept an amendment that would ensure Britain’s overseas territories publish public registers of beneficial ownership of companies.
The sterling conversion of $762bn to £585bn was calculated based on the average FX rate GBP:USD between 1 April 2016 and 31 March 2017.