Income inequality is high and rising within many countries...
as the benefits of economic growth are increasingly captured by wealthy minorities. According to an official measure - the Gini Index - rates of income inequality are extremely high in ten of the world’s most populated countries, including China, the United States of America, Indonesia, Brazil, Nigeria, Russia, Mexico, the Philippines, Turkey, and the Democratic Republic of Congo. The World Bank reports that the bottom 40% of households in these countries earn less than 20% of national income while the top 10% earn more than 30%. But the highest levels of income inequality are actually found in low income countries, especially in sub-Saharan Africa and South America, where all 18 of the world’s most unequal countries are found, including South Africa, Namibia, Haiti, Botswana, Suriname, the Central African Republic, Comoros, Zambia, Lesotho, Colombia, Belize, Brazil, Guatemala, Panama, Swaziland, Guinea-Bissau, Chile and Rwanda. Further, all of these countries appear on the list of countries where the richest 10% of households own more than 40% of national income.
Income inequality is also rising in many high income countries. In the last eight years, 15 of the 34 OECD countries have become more unequal, including Denmark, Estonia, France, Greece, Hungary, Israel, Italy, Japan, Luxembourg, New Zealand, Norway, Slovenia, Spain, Sweden, and the United States. However, it is important to note that over the same period global inequality between countries has actually fallen, with the rise of countries like China and India.
Inequality is a problem when it acts as a barrier to development, slowing economic growth, closing off opportunities for social mobility, increasing the risks of political and social instability, and undermining democratic values and institutions. Several leading economists, including Joseph Stiglitz and Anthony Atkinson, have concluded that inequality is a threat to growth when large populations are left behind with little or no access to pathways out of poverty. UNICEF has shown that in the least developed countries the cost of inequality can be measured in life or death, with the richest 20% of households enjoying much greater access to healthcare and experiencing much lower rates of early death, especially among children. Large disenfranchised populations can also threaten peace and security, and the World Economic Forum’s Global Risk Reports have constantly ranked “severe income disparity” among the greatest risks facing the planet. In his landmark study of inequality, Capital in the 21st Century, Thomas Piketty concludes that high and consistent levels of inequality are a threat to democracies because they, “radically undermine the meritocratic values on which democratic societies are based.”
To orient the democratic conversation and government policymaking towards reversing and reducing income inequality, especially in the countries where it is both high and rising, countries should embrace the World Bank’s “shared prosperity” agenda and set a new target to increase the share of national income owned by the bottom 40% to at least 20% by 2020, and to at least 25% by 2030. Strategies to achieve this goal should include educational investments, jobs growth, technology adoption, and taxation and social policy reforms that disproportionately benefit children and youth from the bottom 40% of households. The overriding objective should be to strengthen the capacities of current and future generations in the bottom 40% to contribute to, and to capture, the benefits of economic growth.
The United Nations, its agencies, and development partners should support both national and global efforts to reduce income inequality building upon Sustainable Development Goal 10.1 ("progressively achieve and sustain income growth of the bottom 40% of the population at a rate higher than the national average"). The UN should measure and report on each country's progress in increasing the share of the bottom 40% to 25% of national income by 2030. The UN should also ensure that development assistance to low and middle income countries with high inequality disproportionately benefits the bottom 40%, and leverages fiscal, wage and social policy reforms that contribute to greater income equality.