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Inequality trapping hundreds of millions in extreme poverty

21st Sep 2015

Goal to end extreme poverty will be missed unless gap between rich and poor tackled, warns Oxfam

 

More than 200 million people will be trapped unnecessarily in extreme poverty - despite world leaders' pledge to end it - unless action to tackle inequality is accelerated, according to an Oxfam paper published today.

World leaders, including David Cameron, will promise to eradicate extreme poverty by 2030 at a UN summit setting global goals for sustainable development later this week. Oxfam is warning that this pledge is impossible to meet without policies to enable the poorest to benefit most from economic growth, such as tax reform, investment in public healthcare and education and ensuring living wages.

Oxfam's report, Inequality and the End of Extreme Poverty, uses projections by World Bank economists to demonstrate how, even using optimistic assumptions about global growth, an extra 200 million people will remain trapped in extreme poverty by 2030 unless poor people's incomes grow faster than those of the rich. People living in extreme poverty have an income of less than $1.25 a day.

The findings follow Oxfam's January report, which showed that unless rising inequality is checked, by next year, the richest 1 per cent will own more wealth than the rest of the world's population combined.

Françoise Vanni, Oxfam Policy and Campaigns Director, said: "The end of extreme poverty is within reach - in 15 years we could live in a world where everyone has the basics they need to get by and care for their families. But this won't happen unless we act to reduce rising inequality that condemns millions of vulnerable women, men and children to lives that are much tougher and shorter than they could be.

"World leaders face an historic challenge. They know that wealth does not automatically trickle down, so to deliver these goals leaders need to challenge the vested interests that are widening the divide between the richest and those most in need."

The international agency will this week launch a major public push inviting people to join the movement to end poverty.

Oxfam's report welcomes the historic success that saw poverty levels reduced by half between 1990 and 2010 but demonstrates how rising inequality in many countries prevented even greater progress.

If developing countries had managed growth so that the income of the bottom 40% of their populations grew two percentage points faster than the average, worldwide poverty rates could have been as low as 5.6% in 2010, meaning an additional 700 million people would have escaped extreme poverty between 1990 and 2010. Evenly distributed growth would have reduced the number of people living in extreme poverty by 200 million.

Vanni added: "We've halved poverty in 15 years but we could have done even better. If world leaders are now to keep their promise to end extreme poverty for good in the next 15 it's essential that they tackle inequality."

Oxfam is calling for action in three areas: preventing tax dodging that costs developing countries millions of pounds each year, investing in public hospitals and schools, and ensuring secure jobs with fair wages, particularly for women whose work is usually worst-paid and most insecure

G20 finance ministers meeting in Lima next month will have an opportunity to scale up the fight against corporate tax dodging by making progress towards global tax rules to ensure multinationals pay tax in the countries where they make their profits, as well as ending the tax-rate race to the bottom that forces developing countries to lose out on vital revenues in order to secure investment.

For more information: For a copy of the Oxfam paper Inequality and the End of Extreme Poverty or interviews with Oxfam spokespeople, please contact the press office: Jon Slater jslater@oxfam.org.uk / 01865 472249 / 07876 476403 or Melanie Kramers mkramers1@oxfam.org.uk  / 07825 088894 / 01865 472498

Ends

Notes to editors

Research by World Bank economists projects that if economies continue to grow at the rates seen in the last 10 years and the distribution of income remains unchanged within countries, the population living in extreme poverty in 2030 will fall to 5.4%, or 450 million people globally. This is more than the 3% target, which represents the goal to eradicate extreme poverty. If however the poorest 40% of people in each country grow 2 percentage points faster than the average growth rate, i.e. growth is 'pro poor', it estimates that the 3% target can be met and 200 million fewer people will be living in extreme poverty by 2030. https://www.ecineq.org/ecineq_lux15/FILESx2015/CR2/p191.pdf

Recent research by the Overseas Development Institute shows that 200 million of the 1.1 billion people living in extreme poverty in 2010 could have escaped extreme poverty if poor people benefited equally from the proceeds of growth during the Millennium Development Goals period. https://www.odi.org/publications/9588-income-inequality-poverty-growth

Oxfam research in January found that if current trends continue, by next year the world's richest 1% of people will own the same amount of wealth as the rest. https://www.oxfam.org.uk/media-centre/press-releases/2015/01/richest-1-per-cent-will-own-more-than-all-the-rest-by-2016

Oxfam research last year demonstrated how extreme wealth also confers political power that can be used to influence rules and systems in favour of an elite at the expense of  everyone else: https://policy-practice.oxfam.org.uk/publications/working-for-the-few-political-capture-and-economic-inequality-311312

Oxfam's Even It Up campaign is calling for action to reduce economic inequality www.oxfam.org.uk/even