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Wealth gap widening for more than 70% of global population, researchers find

Inequality has reached unprecedented levels, with more than 70% of the global population living in countries where the wealth gap is growing, according to a new UN report.

Social and economic disparities have soared even in countries such as Argentina, Brazil and Mexico, where inequality had been falling in recent decades, found the World Social Report.

If nothing is done to address the problem, the prosperity and development of millions of people could be damaged.

“If we don’t act now, the entrenched inequalities that are already there will worsen,” said Elliott Harris, chief economist and assistant secretary general for economic development in the UN Department of Economic and Social Affairs.

But he added: “What is changing now is that there is a greater awareness that this inequality is having consequences and [causing] social upheavals. It’s something we’ve known for some time, but it hasn’t gotten the recognition.”

The report said that while international inequality has declined in relative terms, the absolute gap between the average incomes of people living in high- and low-income countries has doubled since 1990.

Rising inequalities are benefiting the wealthiest. Top income tax rates have fallen in all countries, which have made tax systems less progressive. In wealthier countries, the top income-tax rates have dropped from 66% in 1981 to 43% in 2018.

The income gap has been exacerbated by the climate crisis. The report estimates that the gap between the richest and poorest 10% of the global population is 25% larger than it would be in a world without global warming.

The UN said better use of technology, tackling the climate crisis and improved management of migration and urbanisation could help reduce the inequalities, a target of the UN global goals.

Almost 87% of people living in wealthy countries have internet access compared with 19% in the least developed countries, creating a digital divide that will increasingly marginalise low-skilled workers, said the report.

It added that the impact of the climate crisis threatened to reverse progress on reducing inequality, as the communities most affected by the impact of global heating will find it increasingly hard to escape poverty.

A transition towards greener economies could help combat inequality, said the researchers. Although millions of lower-skilled jobs in carbon-intensive industries will be lost, carefully designed adaptation strategies could create 24m new jobs, they predicted.

Meanwhile, better urban planning and city management could improve the lives of more than 1 billion people who currently live in slums, often with little access to decent sanitation, clean water or energy.

Better migration policies and lower transaction costs for family remittances would also allow millions of people to pursue better opportunities and improve their lives, added the report.

“It is difficult to address inequality, but it can be successfully reduced. We need to agree on the need and the policy, and then address it,” said Harris.

“This is not [our] destiny. If we act now through policy, we can deliver better outcomes.”