20 JAN 2015
Asia’s shocking inequality requires urgent intervention as the region’s poor totals almost half a billion: It’s time to Event it Up
Asia’s remarkable success story in the fight against poverty is at risk as rising inequality across the region now threatens security and growth according to a new study by international agency Oxfam. Launching ahead of the World Economic Forum in Davos, Oxfam urges leaders in Asia to take action if they are to help almost 500 million people still living in poverty in the region.
‘Asia is now at a crossroads. It could continue with the existing policies and risk political, economic, social, and environmental sustainability or it could make a turnaround by addressing inequality more seriously in all aspects to sustain its economic progress,’ said Lilian Mercado, Asia Deputy Regional Director, Campaigns and Policy.
This warning comes as Oxfam’s new briefing note, ‘Asia at a Crossroads’, highlights that though Asia’s remarkable success has created millions of new middle-class citizens, it is estimated there still remains almost 500 million people living in poverty, as the division between rich and poor increases across the region. [i]
‘The fact that Asia continues to encompass hundreds of millions of poor people, whilst China and India have 1.3 million millionaires between them, is an alarm bell for governments, administrations and other relevant institutions and agencies to take immediate action.[ii]In Asia, inequality is widespread in various dimensions, such as public healthcare, basic education and gender. Moreover social structures discriminate on the basis of ethnicity and caste which also exacerbates inequality,’ Mercado added.
Whilst the region’s richest man has amassed US$31 billion in wealth, almost 500 million people barely survive on US$1.25 a day.[iii] It would take one of these poor individuals almost 68 million years to earn that amount, assuming that they could hope to save their entire daily earnings.[iv]
Almost every Asian country has grown wealthier since 1990, most strikingly China, Vietnam, Korea, India, Sri Lanka, Indonesia, Thailand, Malaysia, Singapore, Cambodia and Bangladesh.[v]However, between the early 1990s and late 2000s, the Gini coefficient (standard measurement of economic inequality) for the region as a whole increased an astounding 18 per cent.[vi]. Four out of five Asian people have experienced a sharp rise in economic inequality.[vii]
Oxfam views the causes of inequality in a number of ways, including: lack of opportunities to access healthcare and education, job skills and employment, land, and capital. Systematic denial of access through policies such as unfair wage systems, skewed taxation, low spending in social protection and services has increased inequality. This, in turn, has created a further lack of inadequate access to resources and opportunities, to address the issue.
Some countries are acknowledging the risk of inequality and beginning to take action. Several Asian countries, including China and Thailand, are rapidly scaling-up public investment in healthcare and education. Thailand’s universal coverage scheme halved the amount of money that the poorest people spent on healthcare costs within the first year, as well as cutting infant and maternal mortality rates.[viii] But more still needs to be done and urgently.
The potential benefit of redistributing the wealth of the richest, by even a tiny amount, tells a compelling story. A previous study has shown that a levy of just 1.5 per cent on the wealth of the world's billionaires today could raise enough each year to enrol every child into school and deliver healthcare in the poorest countries.[ix]
For three years, the World Economic Forum’s Global Risks survey has found ‘severe income disparity’ to be one of the major global risks for the coming decade.[x]This is in line with the estimate by the Asian Development Bank (ADB) that an additional 240 million people in Asia – 6.5 per cent of the total population – would have ‘escaped’ extreme poverty had growth been more equitably distributed over the past two decades. [xi]
‘The only way for Asian governments to stop this vicious cycle is to empower poor people and communities, particularly women and marginalised groups,’ Mercado said. ‘It is clear that we need fair and equal access to education and health services as well as fair wages. Therefore, governments, NGO’s, civil society organisations and the private sector, must collaborate and act now to address inequality, in all its guises and forms.
- [i] Estimates from Asian Development Bank for 2015. Asian Development Bank (2014) "Key Indicators for Asia and the Pacific 2014, 45th Edition. Special Chapter, Poverty in Asia: A Deeper Look", Table 5.5, p.34: http://www.adb.org/sites/default/files/publication/43030/ki2014_0.pdf
- [ii] China had 1,181,000 millionaires in 2014, and India had 182,000. Credit Suisse Research Institute (2014) ‘Global Wealth Databook 2014’, p.141 https://publications.credit-suisse.com/tasks/render/file/?fileID=5521F296-D460-2B88-081889DB12817E02. By 2015, there are estimated to be 86 million people living in poverty in East Asia and 310million people living in poverty in South Asia. http://www.worldbank.org/en/publication/global-monitoring-report/poverty-forecasts. In 2010, poverty in China represented 75% of the East Asia regional total, poverty in India represented 86% of the South Asia regional total. Using these proportions, there would be 65 milion people in China and 259 million people in India in 2015, conservatively estimated as more than 300 million in 2014. World Bank (2013) ‘The State of the Poor: Where are the Poor and where are they Poorest?’ p.2 http://www.worldbank.org/content/dam/Worldbank/document/State_of_the_poor_paper_April17.pdf
- [iii] Forbes (2014) ‘The World’s Billionaires’, March 2014 list, http://www.forbes.com/billionaires/list/ and ADB (2014) op. cit.
- [iv] Calculation based on 2014 USD. It would take 24.8 billion days to save US$31 billion at a rate of saving of US$1.25 a day, the equivalent of 67,945,205 years.
- [v] Oxfam calculations, based on World Bank data: http://data.worldbank.org/indicator/SL.GDP.PCAP.KD?page=4 and http://data.worldbank.org/indicator/SL.GDP.PCAP.KD
- [vi] The Gini coefficient of developing Asia as a single unit rose from 39 to 46 between the early 1990s and the late 2000s. ADB (2012) ‘Confronting Rising Inequality in Asia’, ADB Outlook 2012, ADB, p.xviii, http://adb.org/sites/default/files/pub/2012/ado2012.pdf
- [vii] Of the 30 countries that have comparable data, 12 – accounting for about 82 per cent of developing Asia’s population in 2010 – experienced rising inequality of per capita expenditure or income, as measured by the Gini coefficient. R. Kanbur, C. Rhee and J. Zhuang ‘Introduction’, in Asian Development Bank (ADB) (2014) ‘Inequality in Asia and the Pacific. Trends, drivers and policy implications’, p.1, http://www.adb.org/sites/default/files/publication/41630/inequality-asia-and-pacific.pdfop.cit., p.1
- [viii] S. Limwattananon et al (2011) ‘The equity impact of Universal Coverage: health care finance, catastrophic health expenditure, utilization and government subsidies in Thailand’, Consortium for Research on Equitable Health Systems, Ministry of Public Health: http://r4d.dfid.gov.uk/Output/188980
- [ix] Oxfam International (2014) ‘Even It Up: Time to End Extreme Inequality’, page 8. The WHO calculated that an additional US$224.5bn would have allowed 49 low-income countries to significantly accelerate progress towards meeting health-related MDGs and this could have averted 22.8 million deaths in those countries. Thirty nine out of 49 countries would have been able to reach the MDG 4 target for child survival, and at least 22 countries would have been able to achieve their MDG 5a target for maternal mortality. WHO (2010) ‘Constraints to Scaling Up the Health Millennium Development Goals: Costing and Financial Gap Analysis’, Geneva: World Health Organization, http://who.int/choice/publications/d_ScalingUp_MDGs_WHO_finalreport.pdf A 1.5 per cent tax on the wealth of the world’s billionaires (applied to wealth over $1bn) between 2009 and 2014 would have raised US$252bn. Oxfam calculations based on Forbes data (all prices in 2005 dollars).
- [x] World Economic Forum (2014) ‘Global Risks 2013’,Switzerland: World Economic Forum, p.9, http://www3.weforum.org/docs/WEF_GlobalRisks_Report_2014.pdf
- [xi] Kanbur et al (2014), op.cit., p.6.