Preventing the ‘inequality virus’

Nearly ten months since the World Health Organization declared Covid-19 a pandemic, the coronavirus has been massively impacting health and economic systems across the world. It is further deepening the divide between the super-rich and the poor with the second wave. The pandemic is exposing vividly the fault lines and myths of our societies, otherwise veiled in the fallacies of capitalism.

Covid-19 has increased economic inequality and worsened gender inequality and injustice for women and girls, and other people who are marginalized and discriminated upon based on circumstances beyond their control such as gender, religion, birthplace, ethnicity and case. This is the first time this has happened since records began over a century ago.

Oxfam’s new report, ‘The Inequality Virus’, released on the opening day of the World Economic Forum in Davos last week, shows that the world’s 10 richest men have seen their combined wealth increase by half a trillion dollars since the pandemic began – more than enough to pay for a Covid-19 vaccine for everyone and ensure no one is pushed into poverty.

The 1,000 richest people on the planet recouped their Covid-19 losses within just nine months but it will take more than a decade for the world’s poorest to recover from the economic impacts of the pandemic. Rising inequality means it could take at least 14 times longer for the number of people living in poverty to return to pre-pandemic levels.

In Asia, 711 billionaires have seen their fortunes increase by $1.5 trillion dollars since March 2020, enough to give all 157 million people forced into poverty by Covid-19 in the region a cheque for $9,000 each. In South Asia – the poorest subregion – 101 billionaires have seen their fortunes increase by $174 billion dollars since March, enough to give all 93 million people forced into poverty by Covid-19 in the region a cheque for $1,800 each.

Asia was the leader in the fight against poverty at the start of this century, and offered hope to millions around the world-The path of Asian progress was slowed down by the rising inequality, but even the hard wins of the last few decades may be wiped out if the right action is not taken or is delayed.

The rigged economic system is enabling a super-rich elite to amass wealth in the middle of the worst recession since the Great Depression while billions of people, especially those on the frontline of the pandemic – care workers, shop assistants, healthcare workers, street vendors – are struggling to pay the bills and put food on the table.

While the recession is over for the richest, hundreds of millions of people now unemployed are desperate to survive the worst job crisis in over 90 years. ILO and ADB have found that youth unemployment rates increased in six out of nine economies in Asia Pacific, rising higher than adult rates. Experience from past pandemics suggests that the adverse distributional effects could be even larger in the medium term.

Pakistan went into the Covid-19 pandemic with lower economic growth, high inflation affecting poverty reduction efforts and with a high level of economic inequality. Pandemic -elated economic and health shocks may exacerbate disparities, increase poverty and wipe out whatever little progress the country has made against poverty alleviation.

In June 2020, the United Nations University estimated that 10.4 million additional people may be pushed into poverty at $1.90 per day if their income is reduced too. At $3.20 a day, there might be 38.8 million additional poor with a 20 percent reduction in income.

Pakistan took some encouraging policy measures – unthinkable before the crisis – to support its people. For example, it distributed Rs144 billion as a Covid response emergency transfer to 12 million families; each daily wage earner whose livelihoods were severely affected received Rs12000.

Going forward, the fight against inequality must be at the heart of economic rescue and recovery efforts. The government of Pakistan, in collaboration with provincial governments, must: first, ensure everyone has access to a Covid-19 vaccine. Second, invest in universal public services, with incomparable power to reduce inequality. These services close the gap between rich and poor as well as the gap between women and men. Third, safeguard workers’ rights and guarantee income security including living wages, greater job security, with labor rights, sick pay and unemployment benefits if people lose their jobs.

Fourth, strengthen the existing social protection mechanism with increased allocations to achieve universal social protection and ensure informal workers benefit from social protection. Fifth, ensure richest individuals and corporations contribute their fair share of tax. This can include increased wealth taxes, financial transaction taxes, excess profit and an end to tax dodging.

Sixth, use this opportunity to proactively invest in essential care services, reduce the burden of unpaid care work and support women-led medium and small enterprises to reduce enormous gender inequalities and the disproportionate burden of the pandemic on women.

This may not be possible for the government of Pakistan alone; it is struggling with its limited fiscal space, heavy debt burden and limited voice at the global level. Rich and powerful countries and institutions must demonstrate solidarity at this critical moment to support developing countries like Pakistan in debt relief, ensuring fair distribution of the Covid-19 vaccine.

The pandemic is a tipping point. The way the government responds to it can bring us forward or set us back. The government needs to fulfil the duty it owes to their citizens, while people also must come together in solidarity against the inequality virus.

The writer is an Islamabad-based environmental and human rights activist.