Reduced
Inequalities
10.1 Global Perspective on SDG10
One core objective of SDGs is to reduce inequalities within and across countries. The SDGs framework identifies inequality as a key issue to tackle since reduced inequalities can ensure truly inclusive development and drive human progress towards sustainability and universal wellbeing.
Inequality within and among countries around the world continues to be a significant concern despite progress in and efforts at narrowing disparities of opportunity, income and power. Relative global inequality has fallen steadily over the decades, driven by a dramatic decline in inequality between countries; but absolute inequality measures show global inequality has increased substantially over the last decades. Income inequality continues to rise in many parts of the world, even as the bottom 40 per cent of the population in many countries has experienced positive growth rates.
The 2016 Global Wealth Report shows that wealth inequalities, measured by the share of the wealthiest 1 per cent and wealthiest 10 per cent of adults, as compared with the rest of the world’s adult population, continue to rise. While the bottom half collectively own less than 1 per cent of total wealth, the wealthiest top 10 per cent own 89 per cent of all global assets. The richest 33 million people (0.7 per cent of the world’s population) control USD 116 trillion, or 45.6 per cent of the world’s wealth, or more than USD 1 million each. On the other hand, the poorest 3.5 billion people (73 per cent of the world’s population) control only USD 6.1 trillion of wealth, or less than USD 10, 000 in wealth per person..
In more than half of the 92 countries with comparable data during the period 2011–2016, the bottom 40 per cent of the population experienced a growth rate that was higher than the overall national average. However, the bottom 40 per cent received less than 25 per cent of the overall income or consumption. In many countries, the increasing share of income going to the top 1 per cent of earners is of significant concern. The inequality of incomes between different countries is much higher than the inequality within countries. The consequence of this is that the trend of global inequality is very much driven by what is happening to inequality between countries.
In the past, global distribution of per capita income showed a clear divide between richer and poorer countries; and these between-country differences were equally applicable to other development indicators, notably health and education. However, in the present century, the boundaries between developed and developing regions are becoming less clear because of the extraordinary social and economic progress achieved by a large majority of countries; while global economic activity is becoming less geographically concentrated and increasingly dispersed across production networks around the world.
Robust and sound financial systems are essential for supporting equal access to financial services.
High loan asset impairment, measured by the ratio of non-performing loans to total loans for deposit takers, is a potential risk to the soundness of the banking system. For almost half of the 138 reporting countries, the percentage of non-performing loans to total loans was less than 5, while the average median for the period 2010–2017 was 4.3 per cent.
While countries in developing regions represent over 70 per cent of the membership of the UN General Assembly and WTO, which utilise a one member, one vote system, their voting share in other international organisations remains far below these levels. Governance reforms are being negotiated
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at the IMF, and changes were adopted at the World Bank in 2018. However, full implementation will leave developing countries with just over 40 per cent of the voting rights, still short of the 75 per cent they represent in World Bank membership in terms of the number of countries.
Duty-free access continued to increase for LDCs, Small Island developing States and developing regions at large. More than 50 per cent of exports from developing countries are now eligible for duty-free treatment. The increase of duty-free access in world markets was the largest for LDCs, namely in the industrial and agriculture sector. In 2017, total receipts by developing countries from donors of the Development Assistance Committee (DAC) of the Organisation for Economic Cooperation and Development (OECD), multilateral agencies and other key providers were $414 billion, of which $163 billion were ODA.
In South Asia, inequality is a roadblock to progress as it deprives people of opportunity, and subjects many to conditions of poverty. For instance, in the late 2000s, children in the wealthiest quintile of South Asia were two times more likely to complete primary school than those in the poorest.
There is growing consensus that economic growth is not sufficient to reduce poverty if it is not inclusive and if it does not involve the three dimensions of sustainable development – economic, social and environmental. Rising inequalities adversely impact human development. According to the inequality-adjusted Human Development Index (HDI), South Asia loses 25 per cent of its HDI to inequality. To reduce inequality, policies should be universal in principle, paying attention to the needs of disadvantaged and marginalised populations. Inclusion has to be promoted actively, in social as well as political spheres, for all ages, sexes, races, religions and ethnicities to create conditions of equity within countries in South Asia.
Inequality is not inevitable; the current inequalities are mostly the results of deliberate policy choices.
The policy makers need to rectify the harmful tax regimes, including move towards lowering general corporate taxation. In developing countries, inadequate resourcing for health, education, sanitation and investment in the poorest citizens drives extreme inequality. One reason is tax avoidance and other illicit outflows of cash. After falling during much of the twentieth century, current inequality is worsening in the rich countries as well. One suggestion is to reach an international agreement establishing a wealth tax. Since wealth tends to accumulate over generations, fair and well-designed wealth taxes could go a long way towards combating extreme inequality. Further, governments across different countries could establish and enforce national living wages. Low and unlivable wages are a result of worker disempowerment and concentration of wealth at the top — hallmarks of unequal societies.
10.2 Assessment of Progress on SDG10 by Indicators
Rising inequalities have always been considered as a major policy issue in Bangladesh. The Gini coefficient of income distribution stands at 0.483 nationally in 2016; which is 0.498 in rural areas and 0.454 in urban areas. Figure 10.1 shows the trend of income inequality since 1963. Over the entire period of 1963-2016, national Gini has risen from 0.36 to 0.483—an increase by more than 34 per cent—while rural Gini increased by nearly 38 per cent and urban Gini by 21 per cent over the same period. These figures suggest that Bangladesh has experienced increases in the Gini coefficient over the period of last half century but the rate has accelerated especially since the 1990s. Further, inequality increased rather sharply in the rural areas while urban areas experienced somewhat moderate rise in income inequality..
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