A doctor collects a swab sample from a Covid-19 patient at his home on the eastern outskirts of Lima, on January 22, 2021.
ERNESTO BENAVIDES | AFP | Getty Images
LONDON — The 1,000 richest people on the planet recouped their losses caused by the coronavirus pandemic within nine months, according to estimates from Oxfam, but the global charity believes it could take more than a decade for the world’s poorest to recover.
“The world’s 10 richest men have seen their combined wealth increase by half a trillion dollars since the pandemic began — more than enough to pay for a Covid-19 vaccine for everyone and to ensure no one is pushed into poverty by the pandemic,” Oxfam said in a report entitled “The Inequality Virus.”
At the same time, it added, the pandemic has “ushered in the worst job crisis in over 90 years with hundreds of millions of people now underemployed or out of work.”
Women and ethnic minorities were hardest hit by the pandemic, Oxfam said.
“Women and marginalized racial and ethnic groups are bearing the brunt of this crisis. They are more likely to be pushed into poverty, more likely to go hungry, and more likely to be excluded from health care,” Oxfam International executive director Gabriela Bucher said in the report.
“Billionaires fortunes, however, rebounded as stock markets recovered despite continued recession in the real economy. Their total wealth hit $11.95 trillion in December 2020, equivalent to G-20 governments’ total Covid-19 recovery spending.”
When the global pandemic took hold in Europe and the U.S. in spring 2020, global stock markets plummeted as lockdowns were imposed to control the virus. But they have since rallied thanks to unprecedented monetary and fiscal stimulus measures by governments and central banks aimed at mitigating the impact of the health crisis.
Oxfam said the road to recovery will be much longer for people who were already struggling before Covid. “When the virus struck, more than half of workers in poor countries were living in poverty, and three-quarters of workers globally had no access to social protections like sick pay or unemployment benefits,” it said.
Oxfam’s report was published on Monday to coincide with the start of the World Economic Forum‘s Davos Agenda, taking place virtually this year amid the pandemic.
The forum brings together political and business leaders to look for ways to improve the state of the world, although it is dogged by criticism that debate rarely leads to material changes in government or corporate policies. A key theme on the agenda is looking at how to rebuild the global economy on fairer footing after the global health crisis.
There are already concerns about the unequal rollout of coronavirus vaccines. Last week, the director-general of the World Health Organization said the world was on the brink of “catastrophic moral failure” because of the way richer countries had commandeered most of the available vaccine supplies.
Oxfam’s report also called “for the fight against inequality to be at the heart of economic rescue and recovery efforts.”
“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. 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 than it took for the fortunes of the top 1,000 mostly white and male billionaires to bounce back,” Oxfam said.
Long-standing inequality
Oxfam based its calculations on several data sources; the figures on the world’s richest people came from Forbes’ 2020 Billionaires List, and it used World Bank data to model what impact “an increase in inequality in almost every country at once” would mean for global poverty.
It noted that the World Bank had found that if inequality (measured by the Gini coefficient) increases by 2 percentage points annually and global per capita GDP growth contracts by 8% then 501 million more people will still be living on less than $5.50 a day in 2030 compared with a scenario where there is no increase in inequality.
“As a result, global poverty levels would be higher in 2030 than they were before the pandemic struck, with 3.4 billion people still living on less than $5.50 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,” Oxfam said.
Oxfam conducted a global survey of 295 economists from 79 countries for the report and said 87% of respondents expect an “increase” or a “major increase” in income inequality in their country as a result of the pandemic.”
Temporary tax on excess profits
The charity said a temporary tax on excess profits made by the 32 global corporations that “have gained the most during the pandemic” could have raised $104 billion in 2020.
“This is enough to provide unemployment benefits for all workers and financial support for all children and elderly people in low- and middle-income countries,” it said, although a call to raise taxes is likely to be opposed by the business community, which would argue that it creates and supports jobs and incomes.
Responding to report, Mark Littlewood, director general at free market think tank the Institute of Economic Affairs, said that while “Oxfam is right to highlight the impact the pandemic has had on the world’s poorest … the charity’s proposed solutions demonstrate a fundamental misunderstanding of both economics and poverty relief.”
“Taxing the rich ever more may make for good headlines but it misleads the public into thinking that cuts at the top will automatically lead to more wealth at the bottom. In reality, interventionist policies are far more likely to destroy wealth than successfully redistribute it.”
