The growing wealth of the 1 per cent is a problem we cannot afford
Mayling Chan says income inequality is a global issue which is only getting worse, and unless we take action we will not see a world without poverty
Inequality is a deeply rooted conundrum that is harming everyone. And everyone, from US President Barack Obama to the Pope, is denouncing it. Sadly, the situation is only getting worse.
Research by Oxfam revealed that just 62 billionaires now own as much wealth as the poorest half of the world – 3.6 billion people. While the wealth of the richest 62 has increased by 44 per cent since 2010, that of the bottom half plummeted by 38 per cent. Over close to a quarter of a century, the poorest 10 per cent have seen their average income rise by less than US$3 a year – the equivalent of less than a single cent in their daily income.
This may seem strange as we have seen remarkable progress – the number of people living in extreme poverty has been halved over the past two decades. Yet, had inequality within countries not grown between 1990 and 2010, an extra 200 million people would have escaped poverty.
How did this happen? What we see now is the result of 30 years of unchecked deregulation, privatisation, financial secrecy and globalisation. Our economic system only serves the wealthy minority and justifies their actions under the guise of trickle-down economics. Over the years, we have seen benefits for the poorest shrink and their wealth redistributed upwards. Once there, tax havens ensure this money stays in the hands of the wealthy few. When the richest avoid paying their fair share of taxes, they deny governments valuable resources needed to tackle poverty.
Hong Kong, with one of the highest Gini coefficients among developed economies, is no stranger to inequality. According to Credit Suisse’s 2014 report, the wealthiest 1 per cent in the city own 52.6 per cent of Hong Kong’s wealth, and the wealthiest 10 per cent own 77.5 per cent.
Making up a sizeable chunk of the poorest are the working poor. Although they work hard to make ends meet, many cannot support a basic standard of living. The Mandatory Provident Fund offset mechanism – which allows employers to offset employees’ severance and long-service payments against their own contributions – also offers little retirement protection. Inflation further aggravates the problem.
So what can we do? Besides working globally to end tax havens, locally, the government should take a greater role in tackling poverty in at least two ways. First, as the largest employer, it should scrap the MPF offset mechanism in the public sector and set a timetable for total abolition. Second, it should review the minimum wage annually and ensure it is adjusted for inflation. Such steps could begin to create a fairer society.
Mayling Chan is the international programme director at Oxfam Hong Kong