Inequality: what difference does it make to NGOs' work?

Time_for_equality-SummaryI’ve just been reading ‘Time for Equality: Closing Gaps, Opening Trails’, an excellent paper by the UN’s Economic Commission for Latin America and the Caribbean – one of the most innovative and interesting bits of the UN system, in my experience. ECLAC (more commonly known by its Spanish acronym, CEPAL) sets out the dismal history of inequality and Latin America, as well as some of the encouraging recent trends (it’s probably the only region in the world where inequality is falling right now). In terms of policy ideas, it proposes a twin focus – an enhanced role for the state and a series of ‘covenants’ between states and wider society to attack inequality on six main fronts: 1. Macroeconomic policy 2. Production convergence 3. Territorial convergence 4. More and better employment 5. Closing social gaps 6. The fiscal covenant as a key to linking State and equality What struck me is that advocacy NGOs are probably only working on (or even thinking about) number 5, and some bits of 4 (labour rights) and 6 (tax havens). If you’re looking for a wider set of ideas on tackling inequality, this paper is a pretty good place to start. Macroeconomic policy: inflation, investment, financial instability etc. Possible targets could be capital controls and capital flight; Central banks to target jobs not just inflation; a finance system that serves small and medium enterprises (SMEs) as well as the big guys. Production convergence: Huge technology and productivity gaps divide Latin America from the rich countries, and rich and poor sectors within each country. NGOs could advocate for improved industrial policy, state spending on R&D, technological inclusion through e.g. support for SMEs. the_abyss_of_inequality_307515Territorial convergence: In OECD countries, per capita GDP in the richest region is no more than twice the figure in the poorest region. In Latin America the difference can be more than eight times. Ditto within cities. Advocacy could include CEPAL’s proposal for ‘territorial cohesion funds’; more focus on urban and housing policy, or calling for social conditions on government procurement (eg if a company wins a contract to build houses in richer areas, it has to build some in poor ones). More and better employment: Between 1990 and 2002, average wages in Latin America’s micro-enterprises compared to small, medium-sized and large firms fell from 73% to 62%. CEPAL’s advocacy shopping list is pretty much the standard ILO package: training, unionisation, social protection, minimum wage, government recognition of and support for the care economy. It is also highly critical of traditional World Bank calls for ‘flexibilization of labour markets’ (i.e. fewer labour rights), not least on the grounds that ‘history can produce no examples of sustained growth with equality achieved through pro-flexibility labour reforms’. Closing social gaps: this is comfort zone advocacy territory for the NGOs – the state should spend more and better on health, education, housing etc. But CEPAL does think it may be time to move towards a Universal basic income guarantee, and does some useful costings for the bill (see graph).  Fiscal covenant: In Latin America, taxation does not have the same progressive impact on equality as it has in the OECD countries, mainly due to low levels of direct taxation, especially income tax, along with widespread evasion and exemption. CEPAL reckons tax evasion in the region ranges from 40% to 65%, accounting for a loss of potential revenue equivalent to 4.6% of GDP on average. That would buy a lot of social protection….. Possible advocacy targets? Changing public attitudes and beliefs by promoting a fiscal covenant – ‘paying tax is a citizen’s duty, spending tax wisely is the government’s duty’; arguing for a more progressive tax structure (eg shift to direct taxation); closing down loopholes and exemptions. CEPAL also discusses the implications of breaking the cycle of inequality between generations, namely a much greater focus on pregnant women and children, and on climate change: today’s decisions on production and consumption must not undermine the future ability of poor people to produce and consume. If organizations are interested in taking inequality seriously, it’s a pretty good advocacy shopping list. One way to narrow it down is to look at where NGOs might have more/less credibility and legitimacy (eg debates on inflation targeting probably not our strong point….) and what sort of partnerships might strengthen that. [h/t Constantino Casasbuenas] ]]>

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One Response to “Inequality: what difference does it make to NGOs' work?”
  1. Nice blog that you have. With a lot of helpful information.
    I also found a site, called Humania Tv. Here you can find a lot of documentation, video about NGOs, what they have done and how they succeed. I thought you maybe would be interested. Here you can find the link.