Wealth inequaity increases after COVID-19

The gap between the rich and the poor only grew larger with COVID-19

The 1,000 richest people on the planet recouped their COVID-19 losses in 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, revealed a new Oxfam report released yesterday (January 25, 2021). "The Inequality Virus" was published on the opening day of the World Economic Forum’s Davos Dialogues.

The report 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 male billionaires, to bounce back.

A new global survey of 295 economists from 79 countries, commissioned by Oxfam, reveals that 87 per cent 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. The report reveals how the pandemic is deepening long-standing economic, racial, and gender divides.

The recession is over for the richest

The world's 10 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 the 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 per cent 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 per cent more likely to die of COVID-19 than white people while nearly 22,000 black and Hispanic people in the US 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 key to rapid economic recovery

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.

Gabriela Bucher, executive director of Oxfam International, said: "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.”

“Rigged economies are funnelling 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.

“Women and marginalised racial and ethnic groups are bearing the brunt of this crisis," she added. "They are more likely to be pushed into poverty, more likely to go hungry, and more likely to be excluded from healthcare.”

Billionaires' fortunes rebounded as stock markets recovered despite a continued recession in the 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 pre-COVID-19. When the virus struck over half of the 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. Governments around the world must seize this opportunity to build more equal, more inclusive economies that end poverty and protect the planet,” added 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," she said . “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.”