From the TUC

Global poverty: our part in its downfall

19 Jan 2016, by in International

This week the World Economic Forum (WEF) meets in Davos, and in recognition of the leading role of trade unions, Sharan Burrow, the world’s top trade unionist, is one of the co-chairs this year. So it’s particularly apt that yesterday, Oxfam issued a pre-Davos report showing that trade union rights are vital to combat the rising tide of global inequality so ably represented by the corporate glitterati assembled in the Swiss ski resort.

The Oxfam report, An economy for the 1%, reports grimly that the prediction made by the UK-based NGO last year – that the richest 1% would soon have as much wealth as the rest of the human race put together – has come true earlier than they expected. Just 62 people own as much as the poorest 3.6 billion people (half the world’s population), down from 388 people just five years ago. And those richest 62 people have seen their wealth soar by 44% in the last five years, while many British workers have seen their wages frozen.

Studying the rich has made Oxfam realise that it isn’t just global poverty that’s a problem, but global wealth, too: they certainly aren’t ‘intensely relaxed’ about people getting obscenely wealthy. Poverty, inequality and extreme wealth may all be symptoms of the current economic system, but wealth is in itself a cause of the other two, because of the power it confers on the wealthy (ironically on display this year of all years in the contest to become the most powerful elected politician on the planet, the President of the USA.)

So far, so unsurprising. The IMF and OECD have also drawn attention to the way inequality not only immiserates the poor, but fosters economic inefficiency too. Analysis is fair enough – the point, as a German political philosopher once said, is to change things. So what about solutions?

The report’s summary makes it clear that one of the key causes of inequality is what goes on at work:

“One of the key trends underlying this huge concentration of wealth and incomes is the increasing return to capital versus labour. In almost all rich countries and in most developing countries, the share of national income going to workers has been falling. This means workers are capturing less and less of the gains from growth. In contrast, the owners of capital have seen their capital consistently grow (through interest payments, dividends, or retained profits) faster than the rate the economy has been growing. …

“Within the world of work, the gap between the average worker and those at the top has been rapidly widening. While many workers have seen their wages stagnate, there has been a huge increase in salaries for those at the top. Oxfam’s experience with women workers around the world, from Myanmar to Morocco, is that they are barely scraping by on poverty wages. Women make up the majority of the world’s low-paid workers and are concentrated in the most precarious jobs. Meanwhile, chief executive salaries have rocketed. CEOs at the top US firms have seen their salaries increase by more than half (by 54.3%) since 2009, while ordinary wages have barely moved. The CEO of India’s top information technology firm makes 416 times the salary of a typical employee there. Women hold just 24 of the CEO positions at Fortune 500 companies.”

And top of the list of the proposals for change that Oxfam makes is:

“Pay workers a living wage and close the gap with executive rewards: by increasing minimum wages towards living wages; with transparency on pay ratios; and protecting workers’ rights to unionize and strike.”

Oxfam go on to call for progressive public spending, women’s equality and tax fairness, and their main campaign arising from the report is to get Governments to close down tax havens, none of which we’d disagree with. But it’s good to see them recognising the vital role that trade unions and the right to strike must play if we are to tackle and end global poverty once and for all.