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Eight people own same wealth as half the world

Pre-Davos report shows gap between richest and poor is greater than feared

Eight billionaires own the same wealth as the 3.6 billion people who form the poorest half of the world’s population, reveals an Oxfam report published today as global political and business elites gather in Davos for their annual meeting.

An Economy for the 99 Percent shows that the gap between rich and poor is far greater than had been feared. New and better data on the distribution of global wealth – particularly in India and China – indicates that the poorest half of the world has less wealth than previously thought. If this data had been available last year it would have shown that nine billionaires then owned the same wealth as the planet’s poorest half rather than 62, as Oxfam calculated at the time.

Oxfam’s report shows that in 2015 the world’s richest one percent retained their share of global wealth and still own more than the other 99 percent combined. This concentration of wealth at the top is holding back the fight to end global poverty.

The report describes how the inequality crisis is being fuelled by companies whose business models are increasingly focused on delivering ever-higher returns to wealthy owners and top executives. Companies are structured to dodge taxes, drive down workers’ wages and squeeze producers instead of fairly contributing to an economy that benefits everyone. The key theme of this year’s World Economic Forum is responsive and responsible leadership

Oxfam is calling for a fundamental change in the way we manage our economies so that they work for everyone, not just a privileged few. The report is published amid increasing concerns about the economic status quo, with the Bank of England’s Chief Economist warning recently that a ‘rebirth of economics’ is needed to replace out-dated models.

Mark Goldring, Oxfam GB Chief Executive, said: “This year’s snapshot of inequality is clearer, more accurate and more shocking than ever before. It is beyond grotesque that a group of men who could easily fit in a single golf buggy own more than the poorest half of humanity.

“While one in nine people on the planet will go to bed hungry tonight a small handful of billionaires have so much wealth they would need several lifetimes to spend it. The fact that a super-rich elite are able to prosper at the expense of the rest of us at home and overseas shows how warped our economy has become.

“Inequality is not only keeping millions of people trapped in poverty, it is fracturing our societies and poisoning our politics. It’s just not right that top executives take home massive bonuses while workers’ wages are stagnating or that multinationals and millionaires dodge taxes while public services are being cut.”

While the number of people living in extreme poverty has decreased in recent decades, 700 million more people could have escaped poverty if action had been taken to reduce the gap between rich and poor. Experts including the World Bank and the International Monetary Fund warn that further progress is under threat because of inequality.

Oxfam’s report describes how life for the world’s poorest people remains brutally hard. Between 1988 and 2011 the incomes of the poorest 10 percent increased by just $65, while the incomes of the richest 1 percent grew by $11,800 – 182 times as much.

The poorest are the biggest losers of our distorted global economy, especially women who tend to labour in the worst-paid jobs and take on the lion’s share of unpaid care work. On current trends it will take 170 years for women to be paid the same as men.

Economic inequality has shot up the global political agenda in recent years with President Obama and the IMF among those who have cited Oxfam’s work on the issue. Inequality and a feeling among many people of being excluded from the benefits of global growth have also been cited as driving political upheaval from Brexit to the elections of Rodrigo Duterte and Donald Trump in the Philippines and US.

Oxfam is calling for a more human economy where markets – a vital engine for prosperity – are better managed in order to ensure no one is left out or denied basic rights such as decent work, healthcare and education.

Key features would include:

  • improved cooperation between governments to prevent tax dodging that costs poor countries at least $100 billion every year;
  • Government action to encourage companies to act for the benefit of their workforces and wider society as well as their executives and shareholders;
  • taxes on wealth to generate funds for healthcare, education and job creation;
  • action to tackle the barriers that hold back women including lack of education opportunities and the burden of unpaid care work.

Oxfam is calling on business leaders to play their part in creating a more human economy by committing to pay both a living wage and their fair share of tax. The report highlights progressive business practices such as Spanish multinational Mondragon – owned by its 74,000-strong workforce – which structures pay to ensure the highest-paid employee earns no more than nine times the lowest.

In the UK, out-of-control pay ratios means that the average pay of FTSE100 chief executives is 129 times that of the average employee – and equivalent to the earnings of 10,000 people working in garment factories in Bangladesh.

Investors’ share of UK corporate profits has soared to 70 percent from 10 percent in the 1970s, meaning that less is being re-invested in workers and the long-term health of the business. Meanwhile, pension funds’ holdings of UK shares have plummeted from 30 percent 30 years ago to just three percent today.

Goldring added: “Extreme inequality isn’t inevitable – with the right policies, world leaders can rebalance our broken economies so they work for all of us and bring the end of poverty closer. We need a new common-sense approach that ensures a fair deal for workers and producers; requires those who can afford it to pay their fair share of tax; and ensures that women get a fair chance to realise their potential.”

“Oxfam welcomes the Prime Minister’s pledge to tackle inequality in the UK – we’d like to see her make a similar commitment on the global stage. Standing up to powerful interests and corporate bad behaviour won’t be easy but is vital if we’re to ensure a better future for people at home and around the world.”

During the World Economic Forum, people are being urged to sign a petition to the world’s 1810 billionaires asking them to help build an economy that works for everyone: www.oxfam.org.uk/davos

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