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Mega-Rich Recoup COVID-Losses In Record-Time Yet Billions Will Live In Poverty For At Least A Decade

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The 1,000 richest people on the planet recouped their COVID-19 losses within just nine months, but it could take more than a decade for the world’s poorest to recover from the economic impacts of the pandemic, warned Oxfam report today, calling for the fight against inequality to be at the heart of economic rescue and recovery efforts.

In a new report, ‘The Inequality Virus,’ released on the opening day of the World Economic Forum’s ‘Davos Agenda,’ Oxfam shows that 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.

"We stand to witness the greatest rise in inequality since records began. The deep divide between the rich and poor is proving as deadly as the virus,” said Gabriela Bucher, Executive Director of Oxfam International. “Rigged economies are funneling wealth to a rich elite who are riding out the pandemic in luxury, while those on the frontline of the pandemic —shop assistants, healthcare workers, and market vendors— are struggling to pay the bills and put food on the table.”

Oxfam called on governments around the world, including the new Biden-Harris administration, to seize the opportunity to build more equal, more inclusive economies that end poverty and protect the planet.

“President-Biden must quickly work with Congress to enact a transformational COVID-19 recovery plan that helps families cope with the economic impacts of the pandemic, sustainably rebuilds our economy from the bottom up, and begins to tackle the economic, gender, and racial inequalities that have been exacerbated by this crisis, here and around the world,” said Paul O’Brien, Vice-President of Oxfam America. “Now is not the time to tinker around the edges. We need big and bold action for a more dignified future where everyone can thrive, not just survive.”

In a new global survey of 295 economists from 79 countries commissioned by Oxfam for the report, 87 percent of respondents, including Jeffrey Sachs, Jayati Ghosh and Gabriel Zucman, expect an ‘increase’ or a ‘major increase’ in income inequality in their country as a result of the pandemic.

Oxfam’s report shows how the rigged economic system is enabling a super-rich elite to amass wealth in the middle of the worst recession since the Great Depression while billions of people are struggling to make ends meet. The report also reveals how the pandemic is deepening long-standing economic, racial and gender divides.

  • The recession is over for the richest. The world’s ten 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. At the same time, 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 are hardest hit, yet again. Globally, women are overrepresented in the low-paid precarious professions that have been hardest hit by the pandemic. If women were represented at the same rate as men in these sectors, 112 million women would no longer be at high risk of losing their incomes or jobs. Women also make up roughly 70 percent of the global health and social care workforce − essential but often poorly paid jobs that put them at greater risk from COVID-19.
  • Inequality is costing lives. Afro-descendants in Brazil are 40 percent more likely to die of COVID-19 than white people, while nearly 22,000 Black and Hispanic people in the United States would still be alive if they experienced the same COVID-19 mortality rates as their white counterparts. Infection and mortality rates are higher in poorer areas of countries such as France, India, and Spain while England’s poorest regions experience mortality rates double that of the richest areas.
  • Fairer economies are the key to a rapid economic recovery from COVID-19. 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.

“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 healthcare,” continued Bucher.

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 G20 governments’ total COVID-19 recovery spending. The road to recovery will be much longer for people who were already struggling before COVID-19. 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.

“Extreme inequality is not inevitable, but a policy choice,” said Bucher. “The fight against inequality must be at the heart of economic rescue and recovery efforts. Governments must ensure everyone has access to a COVID-19 vaccine and financial support if they lose their job. They must invest in public services and low carbon sectors to create millions of new jobs and ensure everyone has access to a decent education, health, and social care, and they must ensure the richest individuals and corporations contribute their fair share of tax to pay for it.”

In the US, Oxfam urged Congress to pass a multi-trillion-dollar economic recovery plan that challenges corporate power and invests in millions of dignified, green jobs for the people hardest hit by COVID, especially women and people of color. In the spirit of global collaboration, Congress must provide significant new funding and debt-relief to the global fight against COVID-19. Lastly, Congress must pass at least $57B to stabilize the childcare industry, which help facilitate women's transition back into the workforce, support childcare workers—who are largely women of color, and have a multiplier effect on our economic recovery.

“These measures must not be band-aid solutions for desperate times, but a ‘new normal’ in economies that work for the benefit of all people, not just the privileged few,” concluded Bucher.

/ENDS

Notes to editors

Oxfam’s calculations are based on the most up-to-date and comprehensive data sources available. Figures on the very richest in society come from Forbes’ 2020 Billionaires List. Because data on wealth was very volatile in 2020, the Credit Suisse Research Institute has delayed the release of its annual report on the wealth of humanity until spring 2021. This means that we have not been able to compare the wealth of billionaires to that of the bottom half of humanity as we have done in previous years.

The oldest historical records of inequality trends are based on tax records that go back to the beginning of the 20th century.

The World Bank has simulated what the impact of an increase in inequality in almost every country at once would mean for global poverty. The Bank finds that if inequality (measured by the Gini coefficient) increases by 2 percentage points annually and global per capita GDP growth contracts by 8 percent, 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. In the World Economic Outlook (October 2020), the International Monetary Fund’s worst-case scenario does not see GDP returning to pre-crisis levels until the end of 2022. The OECD has warned this will lead to long-term increases in inequality unless action is taken.

Oxfam calculated that 112 million fewer women would be at risk of losing their jobs or income if men and women were equally represented in low-paid, precarious professions that have been most impacted by the COVID-19 crisis based on an ILO policy brief published in July 2020.

Oxfam is part of the Fight Inequality Alliance, a growing global coalition of civil society organizations and activists that are holding the Global Protest to Fight Inequality from 23-30 January in around 30 countries, including Kenya, Mexico, Norway and the Philippines, to promote solutions to inequality and demand that economies work for everyone.

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