Report: Global income, wealth inequalities on rise since 80s

Income and wealth inequalities have been on the rise nearly everywhere since the 80s, said Paris-based World Inequality Lab in its latest report, and reported by Anadolu News Agency.

The World Inequality Report 2022, released on Tuesday, revealed thought-provoking findings over global income and wealth inequality.

The wealthiest 10 per cent of the global population takes up 52 per cent of the global income, whereas the poorest half earns 8 per cent, it said.

These averages mask wide disparities both between and within countries.

The Middle East North Africa (MENA) is the most unequal region in the world, whereas Europe has the lowest inequality levels, the findings revealed.

Wealth ownership

The poorest half of the global population hardly owns any wealth with just 2 per cent, the report said.

In comparison, the wealthiest 10 per cent of the global population owns 76 per cent of all wealth.

On average, the poorest half of the population owns $4,100 per adult, and the top 10 per cent owns $771,300.

While inequality has increased within most countries over the past two decades, global inequalities between countries have declined.

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The gap between the average incomes of the wealthiest 10 per cent of countries and the average incomes of the poorest 50 per cent of countries dropped from around 50 times to a little less than 40 times.

Meanwhile, inequalities rose considerably within countries. The gap between the average incomes of the top 10 per cent and the bottom 50 per cent of individuals within countries has almost doubled, from 8.5 times to 15 times.

Despite economic catch-up and strong growth in the emerging countries, the world remains particularly unequal today, it was stated.

Rise of private wealth

There has been a surge of private wealth in emerging countries like China, Russia, and India.

China and India experienced faster increases in personal wealth after they transitioned away from communism or a highly regulated economic system, the report observed.

China has had the most significant increase in private wealth in recent decades. The personal wealth increase seen in India over this time is also remarkable (up from 290 per cent in 1980 to 560 per cent in 2020).

Richer nations, poorer governments

Over the past four decades, countries have become remarkably more prosperous, while their governments have become significantly poorer, the report noted.

The share of wealth held by public actors is close to zero or negative in rich countries, meaning that the totality of wealth is in private hands.

This trend has been amplified by the COVID-derived economic crisis, during which governments borrowed the equivalent of 10-20 per cent of GDP, essentially from the private sector.

The currently low wealth of governments have important implications for state capacities to tackle inequality in the future and the critical challenges of the 21st century, such as climate change.

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Impact of COVID on inequality

The COVID-19 pandemic, and the economic crisis that followed, hit all world regions in varying intensities.

Europe, Latin America and South and Southeast Asia recorded the most significant drops in national income in 2020 (between -6 per cent and -7.6 per cent), the report said.

However, East Asia, where the pandemic originated, succeeded in stabilizing its 2020 income at the level of 2019.

However, it is still too early for a systematic understanding of the intra-country impact of the crisis on income and wealth inequality owing to the lack of real-time data on the distribution of growth across all countries.

Nevertheless, between 2019 and 2021, the wealth of the top 0.001 per cent grew by 14 per cent, while average global wealth is estimated to have risen by just 1 per cent. In addition, the global billionaire wealth increased by more than 50 per cent between 2019 and 2021.

Coronavirus is affecting the whole world, will it unite us? – Cartoon [Sabaaneh/MiddleEastMonitor]