The world’s 10 biggest corporations together had revenue greater than that of the poorest 180 countries combined in 2015-16, says a new report by Oxfam, released to coincide with the World Economic Forum that opened in Davos on Monday.
Holding out a warning that, if left unchecked, growing inequalities threaten to pull our societies apart, the report called upon world leaders to focus on a ‘”human economy” that “works for the 99 per cent”.
The report, “An Economy for the 99%”, said inequalities were leading to increase in crime and insecurity, and giving rise to widespread disillusionment with mainstream politics, in the process helping forces that fan racism and divisiveness, citing Brexit and Donald Trump’s campaign as examples.
“Total global wealth has reached a staggering $255 trillion. Since 2015, more than half of this wealth has been in the hands of the richest 1 per cent of people. At the very top, this year’s data finds that collectively the richest eight individuals have a net wealth of $426 billion, which is the same as the net wealth of the bottom half of humanity,” says the report, adding that “By any measure, we are living in the age of the super-rich, a second ‘gilded age’ in which a glittering surface masks social problems and corruption.
The analysis of Oxfam, an international confederation of non-profit organisations, places the super-rich as individuals who have a net worth of at least $1 billion.
“While some billionaires owe their fortunes predominantly to hard work and talent, says the report,, it adds that “one-third of the world’s billionaire wealth is derived from inherited wealth, while 43 per cent can be linked to cronyism.”
Pointing at widening wage inequalities, the report says while the income of chief executives has skyrocketed, wages of ordinary workers and producers have barely increased.
“The CEO of India’s top information firm earns 416 times the salary of a typical employee in his company. In the 1980s, cocoa farmers received 18 per cent of the value of a chocolate bar – today they get just 6 per cent,” said the report.
The report sees a “big role” played by big corporations in driving inequalities by maximising profits and squeezing the wages of workers and producers, by using routes such as tax dodging.
“They do this by using tax havens or by making countries compete to provide tax breaks, exemptions and lower rates. Corporate tax rates are falling all over the world, and this – together with widespread tax dodging – ensures that many corporations are paying minimal tax. Apple allegedly paid 0.005% of tax on its European profits in 2014. Developing countries lose $100 billion every year to tax dodging,” it says.
“The annual share dividends from Zara’s parent company to Amancio Ortega – the world’s second richest man – are worth €1.108 million, which is 8,000 times the annual wage of a worker employed by a supplier garment factory in India,” it adds.
When wealth gets sucked upwards
Eight men now own the same amount of wealth as the poorest half of the world.
Over the next 20 years, 500 people will hand over $2.1 trillion to their heirs, a sum larger than the GDP of India, a country of 1.3 billion people.
* An FTSE-100 CEO earns as much in a year as 10,000 people in working in garment factories in Bangladesh.
The incomes of the poorest 10 per cent of people increased by less than $3/year between 1988 and 2011, while the incomes of the richest 10 per cent increased 182 times as much.