Massive global wealth disparity
The 85 wealthiest people in the world possess the same amount of wealth than half of the world’s population, according to a new report by non-profit confederation, Oxfam.
In the report, titled “Working for the few”, published ahead of this week’s World Economic Forum (WEF) in Davos, Switzerland, Oxfam highlights how social stability and security are at risk due to the growing levels of inequality amongst the world’s population.
The issue of inequality is expected to feature prominently at the WEF’s annual meeting, which brings together thousands of high-profile delegates in business, finance and governance from around the globe.
The 2014 edition is expected to draw over 2,600 delegates, with over 250 talks, presentations or discussions scheduled to take place over the five day event.
In its Global Outlook report, the WEF has identified widening income disparities as the second greatest worldwide risk in the next 12-18 months, warning that inequality is undermining social stability and “threatening security on a global scale”.
Drawing data from various sources – such as Forbes, Credit Suisse, Bloomberg and its own research – Oxfam highlighted the following key points to outline the widening gap between the rich and poor across the world:
- Almost half of the world’s wealth is now owned by just one percent of the population.
- The wealth of the one percent richest people in the world amounts to $110 trillion. That’s 65 times the total wealth of the bottom half of the world’s population.
- The bottom half of the world’s population owns the same as the richest 85 people in the world.
- Seven out of ten people live in countries where economic inequality has increased in the last 30 years.
- The richest one percent increased their share of income in 24 out of 26 countries for which we have data between 1980 and 2012.
- In the US, the wealthiest one percent captured 95 percent of post-financial crisis growth since 2009, while the bottom 90 percent became poorer.
Looking closer to home, data shows that South Africa faces a similar disparity in the spread of wealth.
According to data from New World Wealth, South Africa is home to 48,700 high net-worth individuals (HNWIs) who are worth more than US$1 million.
These individuals have a combined wealth of US$200 billion (R2.18 trillion) – accounting for 31% of the country’s total individual wealth of US$650 billion (R7.1 trillion).
With South Africa’s population sitting just under 51.2 million (2012), this means that 0.1% of the population owns approximately 31% of the country’s total individual wealth.
Oxfam conducted a poll across the world, which according to the group, captures the belief of many that laws and regulations are now designed to benefit the rich.
A survey in six countries (Spain, Brazil, India, South Africa, the UK and the US) showed that a majority of people believe that laws are skewed in favor of the rich, it said.
“The large and rising concentrations of income and wealth in many countries represent a global threat to stable, inclusive societies for one simple reason: the unbalanced distribution of wealth skews institutions and erodes the social contract between citizens and the state,” Oxfam said.
“The checks and balances in place to ensure that the majority of the population are heard tend to weaken. Concentration of income and wealth actually hampers the realization of equal rights and opportunities because it makes political representation harder for disadvantaged groups, to the benefit of affluent groups.”
“It has happened in the past and unless we pay close attention to the worrying trends outlined here, it can happen again,” it said.
The group called on world leaders gathering at Davos to make a six-point pledge, which includes to stop dodging tax, to engage in transparent investing and to field more money into social development programmes such as universal healthcare and education, amongst others.
“The time to act on inequality is now. Rising inequality, a trend that has grown apace over the past 30 years, must be reversed,” the group said.
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