Inequality is not inevitable

COVID-19 has wrought havoc in the world and has precipitated major changes in the social, cultural and economic fields, some for the better, some for the worse. Governments, as much as society, are scrambling to make sense of the new order and to decide how to tackle the many challenges that face them. The world will not wait for them.

One of the effects of the pandemic has been to accentuate the inequality which has characterised the economic order in recent years. It is therefore no wonder that reducing poverty and social inequality has become the main policy priority for EU citizens, as a new survey commissioned by the European Parliament has shown.

Nearly half of the respondents (48%) to Parlemeter 2020 believe that the fight against poverty should be put at the top of the European Parliament’s agenda, an increase of 17% compared to the last edition of the survey.

In the past two decades, the number of people living in extreme poverty worldwide has declined by more than 1 billion people. Part of this success in reducing poverty has been reversed due to the pandemic. In a recent forecast drafted by the World Bank, COVID-19 is blamed for pushing some 119 million to 124 million people into extreme poverty during 2020.

In recent research, Oxfam has expressed concern about the rise in inequality worldwide due to the pandemic.  The NGO doesn’t mince any words in claiming that “our economy is broken”. Absurd levels of wealth exist alongside desperate poverty. Since 2015, the richest 1% has owned more wealth than the rest of the planet. In countries around the world, a small elite are taking an ever-increasing share of their nation’s income, while hundreds of millions of people are still living without access to clean water and without enough food.

In 2020, there were reportedly 2,095 billionaires on Earth, with an estimated total net worth of $8 trillion. Of this amount, the top 10 wealthiest people in the world account for $1,153 billion, or roughly 14.41%, which is impressive when you consider that they represent around 0.48% of billionaires. Just three of them – Amazon’s Jeff Bezos, Tesla’s Elton Musk, and LMVH’s Bernard Arnault – are worth as much as the whole of Mexico!

In 2020, there were reportedly 2,095 billionaires on Earth, with an estimated total net worth of $8 trillion.

Extreme inequality is hurting us all, but it is the poorest people who suffer most – especially women and girls. No matter how hard they work, far too many suffer the indignity of poverty wages and are denied basic rights. In many countries a decent education or quality healthcare has become a luxury only the rich can afford.

According to some estimates, it could take more than a decade to recover from the economic hit of the pandemic. Complicating matters is the transition to a green economy, becoming ever more urgent now that climate change is accelerating and threatening the existence of humankind. Making the ecological transition to a sustainable future is essential.

From a social democratic perspective, a transition to a sustainable green economy needs to be implemented in a way that does not further increase social inequality. Otherwise, it will have negative social side-effects, particularly in terms of lost jobs and the impact of increased poverty among the socially excluded. 

Of course, economic restructuring is nothing new: over the history of modern capitalism, many sectors and branches have shrunk dramatically or even disappeared. Agriculture and fisheries in Malta have all but disappeared, their share of value added having crashed from 7.5% to 0.8% over four decades. When I was a journalist in the Sixties, typesetters ruled the roost in the printing press. Today, they are a nostalgic memory.

In some countries, ‘active labour-market’ policies have been a large part of governments’ ambition to ease the transition for individuals caused by technological innovation, competition from countries with lower wages or other forms of structural change in the economy. These policies have been at the heart of the Labour Government’s policy since 2013.

Every person who is, or is likely to become, unemployed is unique. Everything that makes a person suitable for a specific job – skills, age, social and family situation, education, ambitions and interests – demands a tailor-made approach. But the problem is that exactly what type of support the individual needs to find a new job cannot be stated in a law or general principles. 

Instead, the ‘street-level bureaucrats’ who implement the policy have to be given a large amount of discretion as to how each unemployed person can best be supported. As is well-known from research about the problems of implementing public policies, such discretion is a sensitive thing when it comes to securing legitimacy for the policy. The unemployed person in question can feel ‘at the mercy’ of the anonymous officials of JobsPlus.

We do not necessarily hear much about what people in Malta are thinking, but the Parlameter survey gives a glimpse. When asked whether they believe the national economy will be better in a year’s time, 42% of Maltese respondents replied in the affirmative, compared to exactly half in the EU.

But the surprise is in the question whether they expect living conditions to be similarly better. And here, only 21% of Maltese respondents think so, compared to a slightly higher 26% in the EU. In other words, most Maltese do not expect the improvement in the economy to translate into a better quality of life for them. No wonder, that a higher percentage of Maltese believe the main priority should be measures to reduce poverty and inequality.

It therefore appears that policy-makers should be thinking deeply about programmes that involve tax justice, domestic resources mobilisation, and fairer, pro-poor taxation policies.

Concurrently, attention should be paid to effective campaigns for health and education to reach women and girls, who are often the first to suffer.

Finally, civil society should be encouraged and empowered to monitor public finance and to hold the government accountable for delivery of free quality service.

Inequality is not inevitable or accidental. It is the result of deliberate political and economic choices, and it can be reversed.

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