Policy Briefs

ASIA AT A CROSSROADS

  • 05 Feb, 2015

Sharelines

@Oxfam’s brief says inequality in Asia puts the majority of its people at risk of death or injury in the event of a natural disaster #WEF

@Oxfam 700 million people in Asia remain trapped in extreme poverty, most of them women and girls #WEF

Seven hundred million Asians continue to live in abject poverty as their life remains largely untouched by the booming economy of the region.

New research by the World Bank, the Asian Development Bank (ADB) and others indicates that extreme inequality, such as the one Asia faces today, constitutes a structural barrier to future growth.

Rising inequality stifles social mobility and undermines the social fabric. It encourages crime, sparks corruption and can lead to violent conflict.

It also determines vulnerability to natural disasters and other effects of climate change.

Inequality is not a natural outcome of development. Deliberate policy choices have fostered the extremes of wealth and poverty seen across Asia today.

Longstanding discrimination against women, ethnic minorities, lower castes and others sustains economic inequality. Limited economic opportunities and exclusion from political power can trap such groups at the bottom of the ladder.

Oxfam’s latest briefing note ‘Asia at a Crossroads’, highlights that an estimated 500 million people continue to live in poverty while the gap between rich and poor continues to widen.

The report calls for urgent policy reform if Asian countries are to secure a stable future. It suggests an Asian approach to tackling inequality on five pillars:

  • People Empowerment: Ensure that poor people, especially women and marginalised groups, actively participate in shaping institutions, policies and actions so that these do not further widen the gap between rich and poor.
  • Fair Access to Essential Services: Provide everyone with quality health services and educational opportunities.
  • Fair Access to Land and other Productive Resources: Strengthen poor people’s right to land, and expand their access to resources and assets that are crucial to their livelihood and survival
  • Fair Wages: Guarantee equal pay for equal work, and encourage employers to pay sufficient compensation for families to thrive.
  • Fair Taxation: Ensure that everyone pays their fair share and that tax measures do not unduly burden people living in poverty.

All five pillars will require greater attention to the needs of disadvantaged groups and a determined effort to roll back discrimination by reasons of poverty, gender, caste or ethnicity.

In particular, public policy must explicitly promote women’s equality and defend women’s rights.

Today, Asia sits at a crossroads. In order to ensure future development is inclusive and sustainable, national policymakers must face up to the challenge of reducing inequality.

INEQUALITIES is hurting the region

For the third year running, the World Economic Forum’s Global Risks survey has found “severe income disparity” to be one of the top global risks for the coming decade.

Across rich and poor countries alike, societies with higher levels of economic inequality experience lower growth rates over time, higher crime rates and lower life expectancy. Inequality has negative consequences for everyone.

Inequality undermines economic growth

An increasing body of evidence demonstrates that income inequality drags overall growth rates down. High levels of inequality obstruct productive investment, limit the productive and consumptive capacity of the economy and undermine society’s institutions, reducing the chances that growth will be robust and long lasting. Japan, for example, lost 5.6 percentage points from its growth rate over the past two decades due to increases in inequality.

Social inequalities also threaten economic progress. When marginalised groups cannot engage with the economy or access educational opportunities, the region’s workforce and skill base is undermined, in turn diminishing growth.

A conservative estimate shows the GDP of India, Indonesia or Malaysia could be 2 to 4 percent higher if the rate of women’s employment were comparable to that of developed countries.

Inequality undermines institutions because extreme inequality reinforces the concentration of power in the hands of a few, it undermines the social and political institutions essential to a prosperous society.

When those at the top buy their education and health services individually and privately, for example, they have less of a stake in the public provision of such services to the wider population. When wealthier people do not use public services, they feel less incentive to pay their taxes, threatening in turn the financial sustainability of services.

Similarly, the concentration of economic power tends to concentrate political power, undermining democracy and giving elites the ability to block reforms that could reduce the gap between rich and poor.

Inequality impedes poverty reduction

In unequal societies, economic growth pulls fewer out of poverty. The hope that wealth will trickle down to the lower reaches of society has not been borne out by Asia’s experience.

The Asian Development Bank (ADB) estimates that an additional 240 million people in Asia – 6.5 percent of the total population – would have escaped extreme poverty had growth been more equitably distributed over the past two decades.

The story is replicated at the country level. In Indonesia, the poverty rate would have fallen to 6.1 percent by 2008 had inequality not increased; instead it stands at 16.3 percent.

Inequality determines vulnerability to natural disasters and climate change

Asia’s inequality leaves the majority of its people at great risk of death or injury, or loss of livelihood and home, in the event of a natural disaster.

People in poverty often live in substandard housing or in dangerous locations like flood plains, riverbanks or steep slopes, and are less able to escape disaster zones. They are less likely to have savings, insurance or other safeguards to help recover from shocks.

Asia’s vulnerability to disasters

Between 1980 and 2009, Asia accounted for nearly half of all disaster events worldwide.

More recently, 85 percent of the people killed by disasters in 2013 lived in Asia. Other impacts of climate change, such as increasing temperature and rising sea levels, are already being felt across the region.

Marginalised groups – the elderly, people with disabilities, women and ethnic minorities – also face more difficulties recovering from disasters, since access to assistance tends to mirror existing societal inequities. Disasters often push peple into poverty, further deepening inequality and leaving more people vulnerable to future disasters.

Click here to read the complete briefing note.

Key facts in the report:

In Asia, 700 million people remain trapped in extreme poverty, most of them women and girls.

China and India have the most new millionaires in the world, as well as the most people living in poverty. The region’s richest man, Hong Kong’s Li Ka-Shing, has amassed $31 billion in wealth, while 700 million people barely survive on $1.25 a day.

Inequality in health
Among the poorest households in Nepal, twice as many children die before the age of 5 than in the richest households, and this gap has widened. In India, while more than 8 out of 10 of the richest mothers have access to a health care facility in which to deliver a baby, only just over 1 in 10 of the poorest mothers does.

Gender Inequality

Despite women’s predominance in Asian agriculture, women head only 7% of farms, compared to an average of 20% in the rest of the world.

Some measures in the region --
Since 1995 the Philippines requires each government department to earmark at least 5 % of its budget for efforts to promote gender equality and the empowerment of women.

Social Inequality
More than 260 million people are affected by caste discrimination worldwide and the majority of them live in South Asia.

Inequality undermines economic growth
A conservative estimate shows the GDP of India, Indonesia or Malaysia could be 2 to 4 % higher if the rate of women’s employment were comparable to that of developed countries.

Inequality impedes poverty reduction
The Asian Development Bank (ADB) estimates that an additional 240 million people in Asia – 6.5% of the total population – would have escaped extreme poverty had growth been more equitably distributed over the past two decades.

India: Inequality mires people in poverty
If inequality in India continues to grow apace, an additional 90 million people will be mired in extreme poverty in 5 years time. Conversely, just keeping India’s inequality static could lift that 90 million people out of extreme poverty.

What is Oxfam suggesting in tackling inequality?
Among the many concrete steps Asia’s governments can take, Oxfam suggests prioritising five:

  • Empowering People: Ensure that poor people, especially women, are able to actively participate in shaping institutions, policies and actions so that these do not further widen the gap between rich and poor.
  • Fair access to essential services: Provide everyone with access to quality health services and educational opportunities.
  • Fair Access to Land and other Productive Resources and Assets: Strengthen poor people’s right to land, and expand their access to resources and assets that are crucial to their livelihood and survival.
  • Fair taxation: Ensure that everyone pays their fair share and that tax measures do not unduly burden people living in poverty.
  • Fair wages: Guarantee equal pay for equal work, and encourage employers to pay sufficient compensation for families to thrive.

img Become an Oxfam Supporter, Sign Up Today One of the most trusted non-profit organisations in India