Billionaires’ fortunes grew by £585 billion - enough to end extreme poverty more than seven times over - in the 12 months to March 2017, Oxfam said on Monday, as it revealed a new record had been set for the biggest increase in people surpassing the financial milestone - one every two days.
The charity’s Reward Work, Not Wealth report - released ahead of the World Economic Forum (WEF) in Davos, which starts tomorrow - reveals that 82% of wealth generated globally last year went to the richest one percent of the population, while the 3.7 billion people who make up the poorest half saw their wealth flatline.
The charity said economic rewards are “increasingly concentrated” at the top, and there were now 2,043 US dollar billionaires worldwide - with nine out of 10 being men. Further figures showed that 42 people now own the same wealth as the poorest 50% worldwide.
One of the goals Oxfam wants governments to take on is to aim for the collective income of the top 10% to be no more than the income of the bottom 40%.
The latest figures follow a trend between 2006 and 2015 which saw billionaire wealth increase by an average of 13% a year – six times faster than the wages of ordinary workers.
The excessive wealth, Oxfam said, is “often boosted by tax dodging”, with the super-rich using networks of tax havens, such as those revealed in the Paradise and Panama Papers leaks.
A third of billionaire wealth, it found, is “derived from inheritance” and over the next 20 years, 500 of the world’s richest people will hand over £1.73 trillion to their heirs – a sum larger than the GDP of India, a country of 1.3 billion people.
Approximately two-thirds of total billionaire wealth, Oxfam said, is the product of “inheritance, monopoly and cronyism”. Monopolies “fuel excessive returns to owners and shareholders” at the expense of the rest of the economy, the report said, adding: “Very often, ever-increasingly amounts are being returned to wealthy shareholders fuelling a relentless squeeze on workers.”
The Oxfam report calculated that it takes just four days for a CEO of one of the world’s five biggest fashion retailers to earn as much as a Bangladeshi garment worker will earn in her entire lifetime.
Coincidentally, the theme for this year’s WEF is “Creating a shared future in a fractured world” with the forum identifying a number of fractures in global politics, economics and society that it says need attention:
“Politically, new and divisive narratives are transforming governance. Economically, policies are being formulated to preserve the benefits of global integration while limiting shared obligations such as sustainable development, inclusive growth and managing the Fourth Industrial Revolution. Socially, citizens yearn for responsive leadership; yet, a collective purpose remains elusive despite ever-expanding social networks. All the while, the social contract between states and their citizens continues to erode.”
Meanwhile, Oxfam also found women “consistently” earn less than men and are “concentrated in the lowest-paid, least-secure forms of work” and claimed - at current rates - it would take 217 years to close the global gap in pay and employment opportunities.
To further make its point about equality, Oxfam cited cases of women struggling across the globe, from Vietnamese garment factories “whose low wages force them to live apart from their children, women in the US poultry industry who wear nappies because they are denied toilet breaks, and women working in hotels in Canada and the Dominican Republic who stay silent about sexual harassment for fear of being fired”.
Oxfam called for a rethink of legal and business models that “prioritise shareholder returns over broader social impact” and said it was “unacceptable and unsustainable for our economies to continue to enable a super-rich minority to accumulate vast wealth while hundreds of millions of people struggle to survive on poverty pay”.
Oxfam’s report highlighted how the “excessive corporate influence on policy-making, erosion of workers’ rights and relentless drive to minimise costs in order to maximise returns to investors all contribute to a widening gap between the super-rich and the rest”.
Mark Goldring, Oxfam GB Chief Executive, said:
“Something is very wrong with a global economy that allows the one percent to enjoy the lion’s share of increases in wealth while the poorest half of humanity miss out."”
- Mark Goldring, Oxfam GB Chief Executive
He added that the concentration of extreme wealth at the top “is not a sign of a thriving economy but a symptom of a system that is failing the millions of hard-working people on poverty wages who make our clothes and grow our food”.
Goldring said that the world had made “huge strides” forward in ending poverty - between 1990 and 2010 the number of people living in extreme poverty (earning less than $1.90 a day) halved - but progress could be “even faster if we did more to break down the barriers that are holding back the world’s poorest people”.
For work to be a “genuine route” out of poverty, Goldring said, “we need to ensure that ordinary workers receive a living wage and can insist on decent conditions, and that women are not discriminated against”.
He further suggested that world leaders needed to ensure that top earners and businesses pay “their fair share” of taxes and urged them to crack down on tax avoidance. That money could then be used, he said, to fund essential services like schools and hospitals, and creating jobs for young people.
Tax avoidance by businesses and wealthy individuals is estimated to cost developing countries and poor regions $170 billion a year, Oxfam said.
Improved data, Oxfam said, had led to it revising its annual estimate of how many people own the same as the poorest half of humanity, however, it pointed out that “the trend of widening inequality remains”.
Now, 42 people own the same wealth as the poorest 50 percent. Oxfam further calculated that 61 people owned the same as half the world. As recently as 2009, the figure was 380.
A survey of 70,000 people in ten countries, including the UK, demonstrates “huge support” for action to tackle inequality, Oxfam’s report found.
Nearly two-thirds of people – 72% in the UK – say they want the government to urgently address the income gap between rich and poor.
When Britons were asked what a typical British CEO earned in comparison to an unskilled worker, people guessed 33 times as much. When asked what the ideal ratio should be, they said 7:1. FTSE 100 bosses earn on average 120 times more than the average employee.
“Many leaders say they’re worried about the corrosive effect of inequality but their tough talk too often fades away at the first resistance.”
- Mark Goldring, Oxfam GB Chief Executive
Goldring continued: “Some companies and wealthy individuals are taking steps towards fairer ways of doing business but too many others use their power to protect their own interests. To really transform our economies, we need to look again at the business models and laws that prioritise shareholder returns above wider social benefit.”
In the UK, Oxfam is urging the government to help fight tax dodging by using its upcoming Sanctions and Anti-Money Laundering Bill to ensure that Britain’s overseas territories publish the owners of companies incorporated on their shores.
The Paradise Papers revealed the key role that UK-linked tax havens such as Bermuda play in facilitating global tax avoidance.
Pay inequality in numbers:
• In 2017 it took just three days for the UK’s top bosses to make more money than the typical UK full-time worker will earn all year, according to The High Pay Centre.
• In Nigeria, the legal minimum wage would need to be tripled to ensure decent living standards. The richest man in the country also earns enough interest on his wealth in one year to lift two million people out of extreme poverty. Despite almost a decade of robust economic growth in Nigeria, poverty has increased over the same period.
• In the 12 months to March 2017, billionaires’ fortunes grew by a staggering $762 billion [£585 billion] – enough to end extreme poverty more than seven times over.
In Indonesia, the four richest men own more wealth than the bottom 100 million people.
The three richest people in the US own the same wealth as the bottom half of the US population (roughly 160 million people).
In Brazil, someone earning the minimum wage would have to work 19 years to make the same amount as a person in the richest 0.1% of the population makes in one month.
Pay comparison - the very wealthy versus the very poor.
In 2016, annual share dividends from the parent company of fashion chain Zara to the world’s fourth-richest man, Amancio Ortega, were worth approximately €1.3bn.
Stefan Persson, whose father founded H&M, is ranked 43 in the Forbes list of the richest people in the world, and received €658m in share dividends last year.
Anju works sewing clothes in Bangladesh for export. She often works 12 hours a day, until late at night. She often has to skip meals because she has not earned enough money. She earns just over $900 dollars a year.