The business case for combatting inequality

While India fares poorly on a latest worldwide 'Commitment to Reducing Inequality Index', some progressive measures bode well for future improvement. India was recently ranked among the bottom 10 countries in a new worldwide index released on the commitment of different nations to reduce inequalities for its population. UK-based charity Oxfam International's 'Commitment to Reducing Inequality (CRI) Index' ranks India 147^th among 157 countries analysed, describing the country's commitment to reducing inequality as a “a very worrying situation” given that it is home to 1.3 billion people, many of whom live in extreme poverty. “Oxfam has calculated that if India were to reduce inequality by a third, more than 170 million people would no longer be poor,” the index notes. “Government spending on health, education and social protection is woefully low and often subsidises the private sector. Civil society has consistently campaigned for increased spending,” it adds. The second edition of the annual index finds that countries such as South Korea, Namibia and Uruguay are taking strong steps to reduce inequality. However, countries such as India and Nigeria "do very badly" overall, as does the US among rich countries, showing what Oxfam describes as lack of commitment to closing the inequality gap. In reference to India, the index finds that while the tax structure looks reasonably progressive on paper, in practice much of the progressive taxation, like that on the incomes of the richest, is not collected. India also fares poorly on labour rights and respect for women in the workplace India, reflecting the fact that the majority of the labour force is employed in the agricultural and informal sectors, which lack union organisation and enforcement of gender rights. However, there has been significant progress in areas such as parental leave, with India doubling both maternity and paternity leave in 2016 and 2017 respectively. On wage disparity, India is taking some decisive measures by introducing a nationwide floor to try to limit regional divergences, the report notes. “In India, the Midday Meal Scheme helped lighten the schedule of working mothers by providing their children with a meal at school,” it notes. The index is based on a new database of indicators, now covering 157 countries, which measures government action on social spending, tax and labour rights - three areas found to be critical to reducing the gap. The index is topped by Denmark, based on its high and progressive taxation, high social spending and good protection of workers. “However, recent Danish governments have focused on reversing all three of these to some extent, with a view to liberalising the economy, and recent research reveals that the reforms of the past 15 years have led to a rapid increase in inequality of nearly 20 per cent between 2005 and 2015,” it warns. Japan, the top-ranking Asian country, came in at 11^th on the index. The report lauded President Moon Jae-in of South Korea, which came in 56th overall, for showing commitment to tackling inequality in the country in the past year by raising tax on the richest earners, boosting spending for the poor and dramatically raising the minimum wage. It also cited other countries that have made taken strong steps to tackle inequality in the past year. Ethiopia, although at 131st place, now has the sixth highest level of education spending in the world. Chile, at 35th, increased its rate of corporation tax and Indonesia, at 90th, has increased its minimum wage and its spending on health, the report noted. [caption id="attachment_22079" align="alignnone" width="2098"]

Inequality is a policy choice[/caption] The analysis, by Oxfam and non-profit research group Development Finance International (DFI), recommends that all countries should develop national inequality action plans to achieve the Sustainable Development Goals (SDGs) on reducing inequality. These 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.