One of the most incisive and hard-hitting comments on the real import of the COVID-19 crisis came from none other than the United Nations Secretary General, Antonio Guterres. He said: “COVID-19 has been likened to an x-ray, revealing fractures in the fragile skeleton of the societies we have built. It is exposing fallacies and falsehoods everywhere: The lie that free markets can deliver healthcare for all; the fiction that unpaid care work is not work; the delusion that we live in a post-racist world; the myth that we are all in the same boat. While we are all floating on the same sea, it’s clear that some are in super yachts, while others are clinging to the drifting debris.”
Oxfam International’s annual report on inequality for 2021, aptly titled The Inequality Virus, puts the uncomfortable but imperative spotlight on the obscene inequality between the few in “super yachts” and the overwhelming majority “clinging to the drifting debris”. The report was published on the opening day of the World Economic Forum’s ‘Davos Dialogues’.
Over the decades, India has faced mammoth challenges including wars and hunger. But the COVID-19 pandemic, which resulted in a migrant crisis, lockdowns, and serious contraction of the economy, and highlighted a crumbling health system, is an unprecedented test of the republic. This is the moment to use the ‘COVID x-ray’ to recognise the deep fissures caused by the growing inequality in the country; and for post-pandemic recovery, resolve to plan a fundamentally different economic model for ensuring an equal, just and sustainable future for all.
The Oxfam report highlights deeply uncomfortable truths of how the virus has exposed, fed off, and increased existing inequalities of wealth, gender and race. Over two million people have died, and hundreds of millions of people are being forced into poverty while many of the richest, both individuals and corporations, are thriving. Worldwide, billionaires saw their wealth increase by a staggering $3.9 trillion between March 18 and December 31, 2020. Within nine months, the top 1,000 billionaires, mainly white men, had recovered all the wealth they had lost, while recovery for the world’s poorest people according to most estimates could take over a decade.
The pandemic, which is the greatest economic shock since the Great Depression, saw hundreds of millions of people lose their jobs and face destitution and hunger. This shock is set to reverse the decline in global poverty we have witnessed over the past two decades. It is estimated that the total number of people living in poverty could have increased by between 200 million and 500 million in 2020.
Globally, women are over-represented in the sectors of the economy that are hardest hit by the pandemic. If women were represented at the same rate as men in those sectors, 112 million women would no longer be at high risk of losing their incomes or jobs. The unequal impact of the pandemic, in addition to this gender dimension, also has a race dimension. In Brazil, for example, people of Afro-descent have been 40% more likely to die of COVID-19 than white people. The virus has also led to an explosion in the amount of underpaid and unpaid care work, done predominantly by women, and in particular women from groups facing racial and ethnic marginalisation.
Sadly, India is a case in point. The country introduced one of the earliest and most stringent lockdowns in the face of the pandemic, whose enforcement brought its economy to a standstill triggering unemployment, hunger, distress migration and untold hardship.
The rich have been able to escape the pandemic’s worst impact. White-collar workers have easily isolated themselves and have been working from home. The wealth of Indian billionaires increased by 35% during the lockdown and by 90% since 2009. This is despite the fact that most of India has faced a loss of livelihood and the economy has dipped into recession. The increase in the wealth of the top 11 billionaires during the pandemic can easily sustain the Mahatma Gandhi National Rural Employment Guarantee Scheme or the Health Ministry for the next 10 years. We have read astonishing stories of how Mukesh Ambani was making ₹90 crore per hour during the lockdown when 24% of the population was earning under ₹3,000 per month. According to the International Labour Organization, with almost 90% working in the informal economy in India, about 40 crore workers in the informal economy are at risk of falling deeper into poverty.
The Oxfam report undertook a survey of 295 economists from 79 countries. They included leading global economists such as Jayati Ghosh, Jeffrey Sachs and Gabriel Zucman. Of the respondents, 87% expected that income inequality in their country was going to significantly increase as a result of the pandemic. These levels of inequality are not viable and will have a deeply harmful impact. This concern is shared by the International Monetary Fund (IMF), the World Bank, and the Organisation for Economic Co-operation and Development. The IMF Managing Director, Kristalina Georgieva, said, “The impact will be profound […] with increased inequality leading to economic and social upheaval.”
India just celebrated its 72nd Republic Day. We must recognise that a radical and sustained reduction in inequality is the indispensable foundation for a just India, as envisioned in the Constitution. The government must set concrete, time-bound targets to reduce inequality. We must move beyond the focus on GDP and start to value what really matters. Fighting inequality must be at the heart of economic rescue and recovery efforts. This must include gender and caste equality. Countries like South Korea, Sierra Leone and New Zealand have committed to reducing inequality as a national priority, showing what can be done.
Four things could be done on priority. One, invest in free universal healthcare, education, and other public services. Universal public services are the foundation of free and fair societies and have unparalleled power to reduce inequality, including gender and caste inequality. An immediate step could be delivering a free ‘people’s vaccine’ to all citizens to tackle the pandemic.
Two, the virus has shown us that guaranteed income security is essential. For this to happen we need not just living wages but also far greater job security, with labour rights, sick pay, paid parental leave and unemployment benefits if people lose their jobs.
Three, reintroduce wealth taxes and ensure financial transaction taxes while putting an end to tax dodging. Progressive taxation is the cornerstone of any equitable recovery, as it will enable investment in a green, equitable future. Argentina showed the way by adopting a temporary solidarity wealth tax on the extremely wealthy that could generate over $3 billion.
Four, we need to invest in a green economy that prevents further degradation of our planet and preserves it for our children. The fight against inequality and the fight for climate justice are the same fight.
Amitabh Behar is the CEO of Oxfam India
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