In a major setback to global efforts to curb glaring socio-economic inequalities, it has been found that the majority of countries have backslided on their commitments to abate the gaps of privilege and power.

A recent report published on October 21 measured 164 countries’ commitment to reducing inequality. The report, published by international non-governmental organisation Oxfam and Development Finance International (DFI), an international business development advisory firm, assessed the performance of these countries on the basis of three parameters — education, health and social protection, progressive taxation and labour rights and wages.

Combining data from these three pillars, the Index shows that nine out of ten countries have backtracked. Without urgent policy actions to reverse this worrying trend, economic inequality will almost certainly continue to grow.

The report showed that, for the first time since the Index began in 2017, the majority of countries were backsliding across all three critical areas, read the report.

Major cuts in education, health and social protection

Overall, 84 per cent of countries have cut investment in education, health and social protection, 81 per cent weakened their tax systems’ ability to reduce inequality, and in 90 per cent of them, labour rights and minimum wages have worsened.

According to the Index, the top performers in this index are all high-income countries, led by Norway, Canada, Australia, Germany and Finland.

Due to their labour policies, these countries start from much lower wage inequality. They have high social spending and collect more tax revenue, allowing widespread coverage of public services and the greatest impact on inequality.

However, even these top countries are lagging in many indicators. An average of five per cent of their citizens face catastrophic out-of-pocket healthcare costs.

According to the report, Belarus, Costa Rica and South Africa are at the best-performing among the low- and middle-income countries. These countries have relatively higher social spending, service coverage and tax collection than their peers, but perform poorly on many other indicators.

Worst performers

The worst performers in the report are low- and lower middle-income countries, all situated in sub-Saharan Africa (South Sudan, Nigeria, Zimbabwe, Uganda, Central African Republic, Liberia, Sierra Leone and Burundi), except Haiti and Vanuatu.

These countries have very low social spending due to low tax revenues, which results in poor service coverage and limited impact on inequality.

These countries also have extremely high levels of catastrophic out-of-pocket health spending. As a result, millions of children are out of school and tens of thousands of women are dying from preventable deaths as they cannot access basic healthcare.

Their tax policies are also highly regressive, as the poorest people shoulder most of the tax burden through sales taxes such as value added tax (VAT).

Their performance on labour rights and minimum wages is poor, leaving 80 per cent of citizens in vulnerable employment with no rights. The debt crisis, conflict and climate shocks are severely constraining spending in low- and lower middle-income countries. On average, these countries are spending 48 per cent of their budgets on debt service.

But some countries at the bottom of the rankings perform well on some indicators. The Central African Republic has the second most progressive tax policy on paper, Uganda increased its health budget by 29 per cent since 2021 and Vanuatu increased its minimum wage by over 50 per cent.

Coverage stagnating

With only six years until the 2030 deadline for the United Nations’ Sustainable Development Goals (SDGs), the proportion of the population getting access to free education, healthcare and social protection is stagnating.

Universal health coverage averages only 65 per cent, up only marginally from 64 per cent as found in the 2022 Commitment to Reducing Inequality (CRI) report.

According to the report, the high and persistent levels of inequality found in the majority of countries undermine the economic, social, environmental and institutional goals of the World Bank, the IMF and the UN.

“The world's governments are doing even less to fight inequality, exacerbating extremism and undermining growth. With the World Bank adopting a new anti-inequality target, the World Bank and IMF have a new opportunity to champion policies which cut inequality —free public services, fairer tax systems, and stronger workers' rights. They must seize this with both hands,” said Matthew Martin, Executive Director of Development Finance International (DFI).

Simply Put: A real purpose