Some governments are stepping up on inequality – new Oxfam global index launched today

October 9, 2018

     By Duncan Green     

Guest post from Max Lawson, Oxfam’s Head of Inequality Policy 

I am generally a positive kind of person. It is something Duncan and I have in common.  But I must admit, keeping an optimistic outlook can be quite hard in these dark days.  The seemingly ever-larger gap between rich and poor. The rise of racism, sexism and fascism in the US and Europe. It all casts a long shadow over my twitter feed.

So it was great to find some good news for once in the production of this years’ Commitment to Reducing Inequality index (CRI 2018).  To refresh your memories; this is a joint project between Oxfam and Development Finance International. It measures the policy actions taken by 157 governments in three areas that have been shown to be critical to reducing the gap between rich and poor. These are progressive spending (on education, health and social protection), progressive taxation and labour rights.   These are then combined into one score. It is a massive and complex project, involving thousands of separate data points, much of it from primary data gathered from national authorities.  It must be signed off by over sixty Oxfam offices, which is itself pretty complex….

Behind every score in the index there is a story, and some of these are really positive.  Take South Korea. President Moon, a human rights lawyer and son of refugees from the north, was swept to power on the back of massive protests against corruption and corporate capture of politics. He vowed to tackle the growing gap between rich and poor in South Korea and create a more ‘people-centered economy’.  In the last year he has really made good on his word, hiking the minimum wage by 16.4 percent, increasing taxes on wealthy people and corporations, and boosting social spending, including a universal child support grant.

Indonesia too is beginning to deliver on the promises of President Jokowi to reduce the gap between the richest and the rest.  His government has also increased the minimum wage and ramped up health spending, to help finance the move to a new system of universal health coverage.

Since the CRI2017, a surprising number of countries have been increasing taxes on the richest people, and we have seen big steps up in education and health spending.  Georgia increased spending on education by almost 6 percent in 2017. Ethiopia continues to be one of the biggest spenders on education in the world as a percentage of its budget, showing its commitment to get every child educated.

Of course, it is not all good news. Quite surprisingly, Singapore is now in the bottom 10 countries in the world, despite being among the world’s wealthiest nations. This ranking is, in large part, due in part to a new indicator we have added this year on the extent to which a country’s policies enable corporate tax dodging.  Singapore also has no minimum wage, except for cleaners and security guards.

Nigeria ranks last for the second year in a row due to low social spending, worsening labour rights violations, and poor tax collection. The ranking reflects the well-(or rather, ill-)being of the country’s population: one in 10 children die before their fifth birthday.

China spends more than twice as much of its budget on health than India, and almost four times as much on welfare spending, showing a much greater commitment to tackle the gap between rich and poor.

Denmark tops the Index thanks to a long history of policies that have delivered high and progressive taxation, generous social spending, and some of the best protections for workers in the world. However, recent Danish governments are rolling back many of these policies, especially support for refugees. I was in Copenhagen last week with Oxfam IBIS, and rapidly rising inequality and intolerance is a major concern. Other rich countries are also going rapidly in the wrong direction, notably Donald Trump in the United States with his huge tax cuts for the rich, but also countries as diverse as France and Hungary.  Hungary has slashed its corporation tax from 19% to 9%.

This second edition of the Index improves on the methodology used last year by including new indicators on tax dodging and violence against women and relying on more up-to-date sources of data.  The new indicator on violence against women reveals that despite the significant gains made in recent months by the #MeToo and other women’s rights movements, less than half of countries have adequate laws on sexual harassment and rape.

We are launching the CRI 2018 ahead of the Annual Meetings of the World Bank and IMF this week in Indonesia, to put pressure on finance ministers on whether they are doing enough to tackle the gap between rich and poor.

What the CRI 2018 shows clearly is that inequality is a policy choice, not some inevitable force of nature that renders governments powerless.  Clear and simple steps can be taken to tackle it.  Clear and simple steps that several governments are taking, putting others to shame.  Change is possible, and it is happening.  Now that is something to feel positive about and to fight for.

And here’s the Guardian coverage of the launch

October 9, 2018
Duncan Green