Pandemic windfall of world’s ten richest enough to pay for vaccine for all and halt poverty crisis
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The world’s ten richest men have seen their combined wealth increase by $540 billion (£400 billion) during the pandemic, while the crisis threatens a lost decade in the fight against poverty, Oxfam revealed today in a report published on the opening day of the World Economic Forum’s Davos Agenda.
The increase in the wealth of the ten richest is more than enough to both pay for a Covid-19 vaccine for everyone on the planet and reverse the rise in poverty caused by the pandemic. However, while the wealth of the richest increases, support for the poorest is being squeezed with the UK and other donors cutting aid to the world’s poorest.
Oxfam’s report The Inequality Virus found that Covid-19 has the potential to increase economic inequality in almost every country at once, the first time this has happened since records began over a century ago. It sets out how a rigged economy is enabling a super-rich elite to amass wealth in the middle of the worst recession since the Great Depression, while billions of people are struggling amid the worst job crisis in over 90 years. Unless rising inequality is tackled, half a billion more people could be living in poverty on less than $5.50 (£4.00) a day in 2030, than at the start of the pandemic.
Although the stock market collapsed at the start of the crisis, the financial pain for the richest was short-lived. The wealth of 1,000 of the world’s billionaires – who are mostly white males – returned to the record highs seen before the pandemic within less than nine months as stock markets rebounded, despite continued recession in the real economy.
Danny Sriskandarajah, Oxfam GB Chief Executive said “The virus hit an already profoundly unequal world and without urgent action to make our economies work for everyone, things are set to get much, much worse.
“Billions of people were living on the edge when the pandemic began and had no resources or support to weather this fierce storm. In countries across the world we see people struggling to feed their families and keep a roof over their heads, while paid employment becomes harder to come by. At the same time, a tiny number of individuals have pocketed more money in nine months than they could spend in a lifetime.
“These facts are shameful. Governments cannot continue to look the other way, they must act. Fair taxation on the very richest could help with the global recovery, raise more money to fight poverty and help shape more equal societies.”
Rising inequality means it could take at least 14 times longer for the number of people living in poverty to return to pre-pandemic levels. The total wealth of billionaires hit $11.95 trillion (£8.8 trillion) in December 2020, equivalent to G20 governments’ total Covid-19 recovery spending.
Oxfam also commissioned a global survey of 295 economists from 79 countries. Almost nine out of ten (87 per cent) of respondents – including Jeffrey Sachs, Jayati Ghosh and Gabriel Zucman – said they expected an increase in income inequality in their country as a result of the pandemic. Over half thought gender inequality would likely or very likely increase and more than two thirds thought the same for racial inequality.
Oxfam’s report reveals how the pandemic is deepening long-standing economic, racial and gender divides:
- Women are hardest hit, yet again. The economic effects of the pandemic are edging women out of the workplace and reversing decades of progress for participation in the labour force.
Women’s over representation in low-paid, precarious jobs that have been hardest hit by the crisis means that an extra 112 million women are at risk of losing their jobs or income overall. At the same time, women make up the majority of the global health and social care workforce – jobs that are essential but poorly paid, undervalued and also puts them at greater risk from Covid-19.
- Inequality is costing lives. In a number of countries, the pandemic has highlighted gross inequality in health outcomes based on race, ethnicity and income. Evidence suggests that Black people, Afro-descendants and Indigenous peoples are among those more likely to contract Covid-19, and to suffer the worst consequences. For example, Afro-descendants in Brazil are 40 per cent more likely to die of Covid-19 than white people. Records show that Covid-19 mortality rates in England’s poorest regions are double that of the richest areas, while both infection and mortality rates are higher in poorer areas of countries including France, India and Spain.
Levels of Official Development Assistance (ODA) are likely to drop significantly over the next few years. In 2018, this represented a quarter of external finance for least developed countries and if ODA falls in line with countries’ gross national income, it could decrease by between $11-14 billion (£8-10 billion). The UK has already moved to cut its ODA from 0.7 to 0.5 per cent this year, if the legislation passes it will be a further blow to many of the world’s poorest people.
Rather than cut the lifeline offered by aid, donors should look at alternative ways of raising funds from those who have profited during the pandemic. A temporary tax on excess profits made by the 32 global corporations that have gained the most could have raised $104 billion (£76 billion) in 2020. This would be enough to provide unemployment benefits for all workers and financial support for all children and elderly people in low- and middle-income countries.
Such taxes are practical as well as necessary. In December 2020, Argentina passed a one-time levy on the super-rich to help pay for Covid-19 measures, including the purchase of medical supplies and aid for struggling small and medium-sized businesses.
Sriskandarajah continued: “Cutting aid when poverty is rising so sharply while allowing billionaires to pile up ever greater wealth is appalling. Rather than removing help from those who most need it, we should be asking those who can afford it to pay their fair share.
“We are at a pivotal point in human history. We cannot accept that the virus will deepen inequality that was already running out of control. We have to build back better and the fight against inequality must be at the heart of economic rescue and recovery efforts.”
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Notes to editor
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The full report, executive summary and a methodology document outlining how Oxfam calculated the statistics can be found here. The calculations for the Covid-19 vaccine and reversal in poverty caused by the pandemic are on page seven.
Photos and story of health worker Heba Shalan, a mother and nurse from the Jabalia Refugee Camp in northern Gaza Strip can be downloaded here Heba is putting her life on the line caring for patients with Covid-19 without adequate personal protective equipment and for very little pay.
Oxfam’s calculations are based on the most up-to-date and comprehensive data sources available. Figures on the very richest in society come from Forbes’ 2020 Billionaires List and Credit Suisse’s
Global Wealth Report. Because data on wealth was very volatile in 2020, the Credit Suisse Research Institute has delayed the release of its annual estimates on the wealth of humanity to spring 2021.
This means we have not been able to compare the wealth of billionaires to the bottom half of humanity, as in previous years.
According to Forbes, the 10 richest people increased their fortunes by $540 billion (£400 billion) between 18 March and 31 December 2020. The annual Forbes list was published on 18 March, the week after the pandemic was officially declared by the World Health Organisation. The ten richest men were listed as: Jeff Bezos, Elon Musk, Bernard Arnault and family, Bill Gates, Mark Zuckerberg, Larry Ellison, Warren Buffett, Zhong Shanshan, Larry Page and Mukesh Ambani.
The World Bank has simulated what the impact of an increase in inequality in almost every country at once would mean for global poverty. The Bank finds that if inequality (as measured by the Gini coefficient) increases by two percentage points and global per capita Gross Domestic Product (GDP) growth contracts by eight per cent, 501 million more people will still be living on less than $5.50 (£4.00) a day in 2030. This means that global poverty levels would be higher in 2030 than they were before the pandemic struck, with 3.3 billion people still living on less than $5.50 (£4.00) a day. This is the Bank’s worst-case scenario, however projections for economic contraction across most of the developing world are in line with this scenario, and our own evidence suggests that an increase in inequality of two percentage points is very likely.
In preparation for this report Oxfam surveyed 295 economists from 79 countries. They included economists such as Jayati Ghosh, Jeffrey Sachs and Gabriel Zucman. We asked them to say whether they thought inequality would increase because of the impact of the coronavirus pandemic. We asked questions about income and wealth inequality as well as about gender and racial inequality. 87% of respondents expected income inequality in their country was either going to increase or strongly increase as a result of coronavirus.
Oxfam is using the cost of a Covid-19 vaccine for all as an illustrative example. Oxfam is part of the People’s Vaccine Alliance which is calling for open access to all relevant patents and technology to enable safe and effective vaccines and treatments for all.
The oldest historical records of inequality trends are based on tax records that go back to the beginning of the 20th century.
In the World Economic Outlook (October 2020), the International Monetary Fund’s worst-case scenario does not see GDP returning to pre-crisis levels until the end of 2022.
The Organisation for Economic Cooperation and Development has warned this will lead to long-term increases in inequality unless action is taken.
Oxfam calculated that an extra 112 million women are at risk of losing their jobs or income overall based on an International Labour Organisation brief published in July 2020.
Oxfam is part of the Fight Inequality Alliance, a growing global coalition of civil society organizations and activists that are holding the Global Protest to Fight Inequality from 23-30 January in around 30 countries, including Kenya, Mexico, Norway and the Philippines, to promote solutions to inequality and demand that economies work for everyone.