A quarter of wealth in Asia is concentrated in the hands of the wealthy one per cent, as the region faces a crisis of extreme inequality exacerbated by the disproportional COVID-19-related health and economic impacts– according to an Oxfam report published today.
India has the highest level of income inequality in Asia, followed by Lao, Indonesia, and Hongkong, SAR China. Asian countries are also marked by high disposable income inequality, with Sri Lanka performing the worst, followed by Indonesia, India, Tajikistan, and the Philippines.
John Samuel, Regional Director of Oxfam in Asia, said: “We are witnessing an explosion of inequality. The COVID-19 pandemic has increased inequality across Asia by about eight per cent. While the pandemic pushed the number of Asians living in poverty to 1.4 billion, the billionaires pocketed an additional wealth of US$ 1.8 trillion.”
The brief, “Asia’s extreme inequality crisis: Building back fairer after COVID-19” – launched during a civil society event of the Asian Development Bank 55th Annual meeting of the board of directors – highlighted that Asian governments have taken inadequate and ineffective action to combat the rise in inequality, and face constrained policy choices as debt burdens grow and post-COVID austerity begins.
The brief uses data from the Commitment to Reducing Inequality (CRI) Index. Developed by Oxfam and Development Finance International (DFI), the index tracks policy performance of countries on public services, progressive taxation and labour rights.
The analysis highlighted that reducing inequality is a matter of political choice, not a matter of wealth; some lower-income countries like Kyrgyzstan, Mongolia and Tajikistan have been effective in reducing inequality.
Asian countries perform poorly in the provision of public services, spending a very small share of their national budgets on education, health, and social protection. Only 43% of Asia’s citizens have access to any social protection benefits.
Asia’s taxation system relies heavily on collections from VAT and sales taxes, which often exacerbate inequality. Emerging and developing Asia’s tax systems are increasing inequality by 1.4%.
With Myanmar, Bangladesh, and the Philippines ranked 3 out of the ten worst countries in the world for labour rights, legal adoption of and respect for union rights remain poor in Asia. Asia also includes 3 of the worst countries for women’s labour rights, Singapore, Uzbekistan, and Afghanistan.
Debt has risen sharply in Asia to fund COVID responses. Debt service is three times as much as health spending and seven times as social protection spending, and the international community’s response in terms of debt relief has been marginal. To repay debts and reduce budget deficits, 25 of the 28 Asian countries are forced to cut spending by 3% of GDP till 2027. Such austerity needs to end to protect Asian countries against future pandemics and reduce inequality.
The report urges countries to produce National Inequality Reduction Action Plans to address inequality in the post-COVID world and reject austerity and enhance the incomes of the poorest by increasing pro-poor public spending, progressive taxation and workers’ rights and pay.
Panellists from the ADB, DFI and Carleton university discussed the urgent need to implement progressive policies to tackle inequality in Asia during the event.