Very low spending on public healthcare, weak social safety nets and poor labour rights meant the majority of the world’s countries were ill-equipped to deal with Covid-19, new analysis from Oxfam and Development Finance International reveals.
The Commitment to Reducing Inequality Index (CRII), published today ahead of the World Bank and International Monetary Fund (IMF) virtual annual meetings next week, found that only 26 of 158 countries were spending a recommended 15 per cent of their budgets on health prior to the pandemic. In 103 countries, at least one in three workers had no labour protection such as sick pay and only 53 countries had social protection against unemployment, covering less than a third of the global workforce.
The index ranks 158 governments on their commitment to reducing inequality, through public services, tax and workers’ rights policies. The analysis found that in most countries, health and social spending remain far too low to provide universal coverage. Countries including Bahrain, Brazil and Russia all spent less than 10 per cent of their budgets on health. India spent less than four per cent, with only half of the population able to rely on even the most basic healthcare services. Liberia stands out as the only low-income country to exceed the recommended amount, spending over 17 per cent of its budget on health.
Organisation for Economic Cooperation and Development (OECD) countries predictably topped the index, with Norway ranked as the country with the best overall policies to reduce inequality, followed by Denmark, Germany, Belgium and Finland. The UK was ranked 22nd on the index, fifth out of G7 nations and 19th out of 33 OECD countries. While the UK spends 18.33 per cent of its budget on health, the ranking reflects cuts in social protection spending, its use of low corporate tax rates and a lower minimum wage for young workers.
Ana Arendar, Oxfam Head of Inequality Campaign said: “The index shows clearly how woefully unprepared the majority of the world’s countries were for the pandemic. With very low levels of spending on public healthcare, threadbare social safety nets and weak workers’ rights, millions of people were left unnecessarily vulnerable.
“The failure of governments to tackle inequality has resulted in hundreds of millions suffering hardship or missing out on the healthcare they need. Women have paid a higher economic price as a result of the lockdowns introduced in response to the pandemic, while unpaid care work and gender-based violence have increased dramatically.”
Oxfam and Development Finance International also analysed the role of the World Bank and International Monetary Fund (IMF) in the Covid-19 response. While the World Bank has pledged US$160bn (£124bn) in emergency funding, including health projects in 72 countries, only eight of these projects attempt to remove healthcare user fees, which each year bankrupt millions of people and exclude them from treatment.
The IMF has made available US$1 trillion (£774bn) in emergency funding and has cancelled some payments on debt service owed to it. But it is already calling for austerity to reduce debt burdens once the pandemic has been contained; virtually all of the national emergency loan documents emphasize the need for governments to make Covid-19 spending temporary and to reduce deficits after the pandemic.
The index also shows that while Covid-19 has been a wake-up call for some, other countries have failed to act with disastrous consequences. For example:
- The United States ranks last out of the wealthy G7 countries and trails 17 low-income countries like Sierra Leone and Liberia on labour legislation due to anti-union policies and a very low minimum wage. The Trump administration gave only temporary relief to vulnerable workers with its April stimulus package after having permanently slashed taxes which overwhelmingly benefitted corporations and rich Americans in 2017.
- Kenya, which had ranked highly (ninth) on progressive tax policies, has responded to the 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.
- Togo and Namibia, countries already taking strides to tackle inequality before the pandemic, have provided monthly cash grants to informal workers who lost their jobs because of lockdown measures. Ukraine, which has one of the lowest rates of inequality in the world, has increased frontline healthcare workers’ pay by up to 300 per cent.
Matthew Martin, Development Finance International’s Director, said: “Extreme inequality is not inevitable, and you don’t have to be a wealthy country to do something about it. We know that policies such as free public healthcare, universal old age and disability pensions, decent wages and a fair tax system, have been proven to fight inequality. Failure to implement them is a political choice – one that Covid-19 has exposed with catastrophic economic and human costs.”
Oxfam and Development Finance International are calling for governments to increase and improve investment in healthcare and social protection, tax wealth and high incomes, crack down on tax loopholes and ensure workers receive living wages and are better protected.
Rich countries should help developing countries whose finances have been hit hard by the pandemic. They can do this by approving a large new issue of IMF Special Drawing Rights, and by extending the current G20 debt suspension initiative (the DSSI) to the end of 2022 – expanding it to middle-income countries in need and to private and multi-lateral creditors such as the World Bank. This will help countries free up funds in their budgets to pay for vital public services and economic stimulus packages.
Notes to editor
The index is not a measure of the levels of inequality in a country, it ranks governments on their commitment to reducing inequality.
The CRI Index has three pillars, each of which relates to one policy area that has been found to be critical in reducing inequality – public services, taxation and labour. Each pillar looks at the policies that each government has enacted, the implementation or coverage of these policies in practice and the impact of these policies on reducing income inequality.
Scoring is calculated using 19 different indicators, with a top potential mark of one, with zero being the worst performing country and one the best. These scores are then averaged across the pillars to produce scores for each pillar and an overall score, also between zero and one. Based on these scores, countries are ranked for each pillar and overall.
CRI Index ranking of 158 countries – Top 10
|Country||Public services ranking||Tax ranking||Labour ranking||CRI ranking|
Download the Commitment to Reducing Inequality Index (CRII), methodology note and datasets here
The CRII interactive website can be accessed here
The 2020 CRII has seen significant changes in methodology from 2018. These changes to the index’s methodology mean that a straight comparison between the scores of a country in the 2020 index and those for 2018 may not give an accurate picture of its performance. For this reason, analysis of changes focuses on concrete policy changes since 2018’s index.
Oxfam and Development Finance International used the 15 per cent health budget recommendation in line with the Abuja Declaration. In April 2001, heads of state of African Union countries met and pledged to set a target of allocating at least 15 per cent of their annual budget to improve the health sector. The Abuja Declaration provides a budget benchmark for other countries on health spending levels.