- The latest World Inequality Report highlights the extent of wealth and income inequalities between and within countries.
- The COVID-19 pandemic has exacerbated many existing inequalities.
- Political action is necessary to tackle income inequality, the report's authors argue.
A new report has shown that the COVID-19 pandemic has exacerbated existing inequalities.
“The COVID crisis has exacerbated inequalities between the very wealthy and the rest of the population. Yet, in rich countries, government intervention prevented a massive rise in poverty, this was not the case in poor countries. This shows the importance of social states in the fight against poverty.”, explains Lucas Chancel, lead author of the report.
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Income and wealth inequalities significant
The report highlights the extent of global income and wealth inequalities. At a global level the average income for an adult is $23,380 (when adjusted for Purchasing Power Parity or PPP).
However, the report's authors explain that this conceals wide disparities between and within countries. The richest 10% of the global population currently take home 52% of the income. The poorest half of the global population? Well they earn just 8%.
On average, an individual from the top 10% will earn $122,100, but an individual from the bottom half will earn just $3,920.
And, when it comes to wealth (valuable assets and items over and above income), the gap is even wider. The poorest half of the global population owns just 2% of the global total, while the richest 10% own 76% of all wealth.
But, the report's authors also remind us that significant inequality can exist within countries. "National average income levels are poor predictors of inequality," they explain. High-income countries can be unequal, as can low- and middle-income countries.
Indeed, while over the last two decades global inequalities between countries have declined, income inequality has increased within most countries. The average income gap between the top 10% and bottom 50% of individuals within countries has almost doubled across that time period, the report found.
The impact of the COVID-19 pandemic on income inequality
2020 marked the steepest increase in the global billionaires' share of wealth on record, the report found. Indeed, since 1995, the share of global wealth owned by billionaires' has risen from 1% to over 3%.
As the chart below explains, the world's richest have captured a disproportionate share of global wealth over recent decades.
Tackling income inequality
Addressing the challenges of the 21st Century, will not be 'feasible without significant redistribution of wealth & income inequality', the report's authors argue.
The report explores various options - mainly rooted in taxation policies - to tackle income & wealth inequality. The examples offer lessons from across the globe and throughout recent history, they explain, and conclude that "inequality is always political choice and learning from policies implemented in other countries or at other points of time is critical to design fairer development pathways."