Inequality is a global problem

While inequality is a global problem, its growth is most pronounced and the political, social and economic challenges it poses are most complex and pronounced in the global South

Bag sellers at Kumasi market in Ghana. Over 80% of workers on the continent work in the informal sector. Photo by DeAgostini/Getty Images

In the last decade inequality has been placed at the centre of the agenda for global social and economic policy. This has been driven in large part by the pioneering work of the British economist Sir Tony Atkinson, French economist Thomas Piketty’s ‘Capital in the Twenty-First Century’, and the work of sociologists like Goran Therborn.

All of the key United Nations development targets such as the Sustainable Development Goals are informed by, and have as their key targets, the need to address growing levels of inequality across the globe.

Global attention on inequality is also informed by a set of issues that have given rise to more virulent right-wing politics in the US, the UK and much of Europe. This is the outcome of growing levels of inequality and high levels of discontent among so-called “blue-collar” workers, and the consequent rise of identity politics.

But, in our view, debates about inequality have not been sufficiently informed by perspectives from the global South.

If we are to address inequality across the globe the issue of inequality between countries – and the historical and political factors giving rise to this – cannot be ignored.

Given this reality, we have identified four main issues that we believe should drive the research agenda in the global South.

Notwithstanding the focus across the globe on the issue of inequality, in reality, very little has been achieved to fix the problem. This is most starkly shown by the Covid-19 pandemic, which has exposed massive inequalities across the globe.

Part of the reason for this is that the realities of inequality in the global South, and the forces driving these patterns, aren’t sufficiently understood. For example, according to the International Labour Organisation in Africa around 85.8% of employment is informal. These workers do not form part of how labour markets are traditionally understood.

Another big difference is that in much of the global North, fiscal transfers are able to improve inequality outcomes. The global South has limited fiscal scope because it lacks the ability to raise large tax revenues.

Focus areas

Based on our insights from setting up the Southern Centre for Inequality Studies, and our first four years of research, we have identified four areas that we believe should be at the forefront of the research agenda of academics in the global South.

We set them out below.

Technical solutions: These include fiscal transfers. While important, they are not by themselves sufficient to address inequality. What is needed is a fuller understanding of the political, social and economic factors driving the growth in inequality. This includes how these forces may be different in the global South. Inequality is a global problem, but this does not mean its causes are universal. Inequality is in essence an issue of power, which is socially constructed. For this reason, context matters. While inequality is a global problem, its growth is most pronounced and the political, social and economic challenges it poses are most complex and pronounced in the global South.
Money-metric assessments: One example of these assessments is the Gini coefficient, which measures levels of inequality. These assessments have been useful for measuring inequality but don’t offer useful solutions. Inequality studies and policies need to move away from a preoccupation with these measures. This is important if we are to understand inequality as a violation of human dignity. Here, a multidisciplinary approach is called for if we are to solve the inequality challenge. History, sociology, gender studies, anthropology, philosophy, the natural sciences, and health sciences have as much to contribute as economics.

It is for this reason for example that UNAIDS executive director Winnie Byanyima will present the Southern Centre for Inequality Studies’ annual Inequality Lecture. Ms Byanyima was previously Executive Director of Oxfam International and director of Gender and Development at the UNDP.

Differences in capacity: It’s important to understand the differences in the fiscal capacities of countries in the global North and the global South to address inequality. High-income countries can ameliorate somewhat the high levels of inequality because they have high levels of taxation and significant state capacity. But this isn’t possible in much of the global South – at least not to the same extent. This generates complex social and economic challenges which require policy attention.

Joined at the hip: This points to the need to understand that inequality within countries is inextricably linked with the forces shaping inequality between countries. The problem can’t be solved simply in one geography. Inequality between countries needs to be tackled simultaneously.

What next

The COVID-19 pandemic has brought into sharp relief how very differently countries are experiencing the burden of the pandemic.
The heaviest tolls have been exacted on the most economically marginalised countries. In South Africa, for example, job and income losses have been most pronounced. Low-paid workers, the young and workers in the informal economy and in service sectors have borne a disproportionate burden of job and income losses. Women, who make up a substantial portion of workers in the services economy, have been the hardest hit.

Countries in the global North have been able to protect their economies from the impact of the Covid-19 pandemic through a stimulus package of unprecedented levels. The US stimulus package has been estimated at US$1.9 trillion. Developing and emerging economies, on the other hand, have been thrown into a deep-seated economic crisis due to the pandemic.

The Covid-19 pandemic has also highlighted inequality between countries. This is most starkly evident in the way in which access to vaccines has been determined. This is undermining the recovery in both developing and developed countries and points to the need for inequality to be tackled as a global issue, between countries and within countries.

For all of the excellent academic research on inequality, the COVID-19 pandemic shows us that very little has been achieved at the policy level to actually address the challenge and to move to a more equal world. If we are to do that, global policies have to address the realities of how unequal economic and social patterns are across the globe.

Moreover, the realities of inequality from the perspective of the global South need to inform these policy changes. If we don’t pursue such an ambitious policy agenda, the Covid-19 pandemic will be yet another shock, like the 2008 global financial crisis, that exposes the fragility and inequalities in our economic and social systems, but that we quickly forget about – that is, until the next global shock.

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* Published in print edition on 1 October 2021

Tags:Covid-19 Pandemic, Inequality, Informal Economy, SDG, UN Sustainable Development Goals