Inequality alarming

Bangladesh is performing poorly in reducing the gap between the rich and the poor despite posting more than 7 percent economic growth in recent years as it ranked 148 among 157 countries in this year's “Commitment to Reducing Inequality Index” of Oxfam. 

In South Asia, Bangladesh is only ahead of Bhutan, lagging behind the Maldives, Sri Lanka, Afghanistan, Pakistan, Nepal and India, according to the report published yesterday.

In the overall ranking, the Maldives ranked 68, Sri Lanka 102, Afghanistan 127, Pakistan 137, Nepal 139, India 147 and Bhutan 152.

The index is based on a new database of indicators, which measures government action on social spending, tax and labour rights -- three areas found to be critical to reducing the gap.

Bangladesh ranked 146 on spending, 103 on taxation policies and 148 on labour rights and wages, according to the report jointly produced by the Oxfam and the Development Finance International (DFI).

The index, which is in its second edition, found that countries such as South Korea, Namibia and Uruguay are taking strong steps to reduce inequality.

“Sadly, countries such as India and Nigeria do very badly overall, as does the US among rich countries, showing a lack of commitment to closing the inequality gap.”

The report said many countries across the world have experienced rapid growth in the gap between the richest people in society and everyone else over the past 30 years.

“Failure to tackle this growing crisis is undermining social and economic progress and the fight against poverty.”

Oxfam's research has shown that since the turn of the century, the poorest half of the world's population have received just 1 percent of the total increase in global wealth, while the top 1 percent have received 50 percent of the increase.

“The inequality crisis is not inevitable and that governments are not powerless against it. Inequality is a policy choice, and our findings this year show this clearly. All over the world, governments are taking strong policy steps to fight inequality.”

The report also said tax compliance is a significant issue as the number of income taxpayers in countries like Bangladesh, Pakistan and others is very low.  Instead of broadening their tax bases by enforcing taxation on companies and individuals, countries tend to rely upon value-added tax and other indirect taxes.

Gender-sensitive taxation is not sufficiently addressed, resulting in women and girls being unfairly taxed and in need of better-funded essential public services.

An interesting policy undertaken by Bangladesh is the establishment of a lower threshold for exemption on income taxation for women, taking into account the wage gap and the high rate of informal labour in the country, the report said.

There is often great variation in minimum wages.

Some of the lowest-scoring countries, such as Swaziland and Egypt, are well known for their weak labour laws and violations of workers' rights, while others such as Bangladesh are known for poor labour practices.

In Bangladesh, for example, garment workers are entitled to Tk 5,300 ($68) a month, the lowest minimum wage of all garment workers globally and well below the international poverty line.

However, workers in other sectors in Bangladesh are entitled to only Tk 1,500 ($19) a month.

Denmark's track record on progressive taxation, social spending and worker protections earned it the top spot.

Nigeria came at the bottom due to low social spending, poor tax collection and rising labour rights violations.

Singapore, one of the world's richest countries, came in at 149, which is in the bottom 10, partly because of practices that facilitate tax dodging, Oxfam said.

The report recommends that all countries develop national inequality action plans to achieve the Sustainable Development Goal 10 on reducing inequality.

The plans should include delivery of universal, public and free health and education and universal social protection floors. 

“They should be funded by increasing progressive taxation and clamping down on exemptions and tax dodging. Countries must also respect union rights and make women's rights at work comprehensive, and they should raise minimum wages to living wages.”

Headquartered in London, the Development Finance International is a non-profit capacity-building, advocacy, advisory and research group.

Oxford-based Oxfam is an international confederation of 20 organisations networked together in more than 90 countries.