Jomo Kwame Sundaram. Credit: FAO

By Jomo Kwame Sundaram
ROME, Sep 8 2015 (IPS)

Recent years have seen a remarkable resurgence of interest in economic inequality, thanks primarily to growing recognition of some of its economic, social, cultural and political consequences in the wake of Western economic stagnation.

The unexpectedly enthusiastic reception for last year’s publication of Thomas Piketty’s “Capital in the Twenty-First Century” underscores this sea change.New thinking on social protection recognises that most of the poor and vulnerable in developing countries are outside the formal economy, with almost four-fifths of the poor living in the countryside.

Piketty has correctly renewed attention to the connections between the functional and household/individual distributions of income as well as to wealth inequality. Clearly, the distribution of wealth (capital, real property) is the major determinant of the functional distribution of income.

And by textbook economics’ definition, profit maximisation involves capturing economic rents of some kind – from finance, monopolistic intellectual property rights (IPRs), ‘competitive advantage’, producer surplus, etc., presumably thanks to successful rent-seeking, by influencing legislation, regulation, public policy, public opinion and consumer preferences.

As is understandable and the norm, Piketty’s focus is on inequality at the national level, rather than at the global level. But Branko Milanovic and others have shown that about two-thirds of overall world interpersonal or inter-household inequality is accounted for by inter-country inequality, with the remaining third due to what may be termed class and other intra-national inequalities.

International inequality

There are many competing explanations for international inequalities. Historical differences in capital accumulation, including public investments, and productivity are commonly invoked to explain different economic capacities, capabilities and incomes.

But frequently unsustainable foreign investments also lead to significant net outflows, greatly diminishing the net benefits from additional economic capacities. Financial flows to the settler colonies from the late 19th century were exceptional in this regard. Generally, a small share of foreign direct investment actually enhances economic capacities, instead mainly contributing to acquisitions and mergers.

Financial globalisation in recent decades, especially capital market flows, have not ensured sustained net flows from capital-rich to capital-poor economies, but has instead worsened financial volatility and instability, increasing the frequency of crises with traumatic effects for the real economy, and growth sustainability.

Contrary to the conventional wisdom that international trade lifts all boats, it has generally favoured the richer countries at the expense of their poorer counterparts. For well over a century, except during some notable periods and some rare minerals more recently, the prices of primary commodities have declined against manufactures.

This has been especially true of tropical agriculture compared to temperate products, as productivity gains have accrued to consumers more than to producers. In recent decades, cut-throat competition has meant a similar fate for developing country manufactured exports compared to the large marketing margins of manufactures from developed economies.

Social protection

As the deadline for the Millennium Development Goals approaches, the call to address inequality as a crucial challenge for development has emerged as an issue to be addressed in the post-2015 development framework.

Inequality gradually came back into development debates after the United Nations, the World Bank and the IMF focused flagship publications on this issue a decade ago, with the publication of the UN 2005 Report on the World Social Situation entitled The Inequality Predicament, the World Development Report 2006, and the 2007 World Economic Outlook on Globalization and Inequality.

The ongoing effects of the global financial and economic crisis since 2008 have reinforced recognition that inequality has been slowing not only human development, but also economic recovery. But this has not led to any fundamental change in economic policy thinking or a major commitment to redress inequality at the global or even national level, except perhaps by improving taxation.

Instead, it has led to a consensus to establish a global social protection floor, recognising not only that poverty and hunger in the world will not be eliminated by more of the same economic policies, especially with the currently dim prospects for sustained economic and employment recovery and growth.

Historically, the welfare state emerged in developed countries to address deprivations in the formal economy – retirees, retrenched workers, military veterans and mothers among others. Social protection and other fiscal interventions do not fundamentally challenge wealth or income distribution, and current thinking is mindful of the potentially unsustainable burden of a welfare state.

New thinking on social protection recognises that most of the poor and vulnerable in developing countries are outside the formal economy, with almost four-fifths of the poor living in the countryside. The new interventions thus seek to accelerate the transition from protection to production, for greater resilience and self-reliance.

Edited by Kitty Stapp

Excerpt:

Washing clothes in a stream, Mchinji District, Malawi. Goal-setting can lift millions of people out of poverty, empower women and girls, improve health and well-being, and provide vast new opportunities for better lives. Credit: Claire Ngozo/IPS

By Thalif Deen
UNITED NATIONS, Jul 6 2015 (IPS)

The United Nations, which launched one of its most ambitious anti-poverty development programmes back in 2000, has hailed it as a riveting success story – despite shortcomings.

Launching the final report of the Millennium Development Goals (MDGs) at a meeting in the Norwegian capital of Oslo on Monday, Secretary-General Ban Ki-moon said “following profound and consistent gains, we now know that extreme poverty can be eradicated within one more generation.”“If people go to bed hungry, don’t have access to water and sanitation, to education or health coverage, the income threshold is not the end of poverty." -- Ben Phillips of ActionAid

The MDGs, which are targeted to end this December, “have greatly contributed to this progress, and have taught us how governments, business, and civil society can work together to achieve transformational breakthroughs,” he said.

The United Nations claims it has cut poverty by half. “The world met that goal – and we should be very proud of that achievement,” he added.

But the target for the complete eradication of poverty from the developing world has been set for 2030 under a proposed post-2015 development agenda, including a new set of Sustainable Development Goals (SDGs), to be launched at a summit meeting of world leaders in September.

Goal-setting can lift millions of people out of poverty, empower women and girls, improve health and well-being, and provide vast new opportunities for better lives, according to the Millennium Development Goals Report 2015 released Monday.

“Only two short decades ago, nearly half of the developing world lived in extreme poverty. The number of people now living in extreme poverty has declined by more than half, falling from 1.9 billion in 1990 to 836 million in 2015,” the study said.

But civil society organisations (CSOs) were sceptical about the claims.

Jens Martens, Executive Director of Global Policy Forum (New York/Bonn), told IPS rather bluntly: ”The MDGs are not a success story.”

They reduced the development discourse to a small number of quantitative goals and targets and did not touch the structural framework conditions of development, he said.

Pointing out some of the shortcomings, he said the goal on income poverty has been weak and the threshold of 1.25 dollars per day completely inadequate. Someone with a per capita income of 1.26 dollars is still poor.

“And focusing only on income poverty is not at all sufficient. Governments have to deal with the problems of poverty and inequality in all their dimensions.”

Furthermore, said Martens, the MDGs did not take into account that the consumption and production patterns of the people in the global North, with their impact on climate change and biodiversity, have grave consequences for the survival and living conditions of the people in the global South.

Therefore, it is good news that the new SDGs reflect a much broader development approach, are universal and multidimensional, and contain not only goals for the poor but also goals for the rich, he noted.

Ben Phillips, International Campaigns and Policy Director at ActionAid, told IPS world leaders cannot fulfil their pledge to end poverty unless they tackle the crisis of the widening gap in wealth and power between the richest and the rest.

Ending poverty by 2030 cannot and should not be only an arithmetic exercise on the basis of very low dollar poverty lines which will not guarantee a life of dignity for all, he said.

“If people go to bed hungry, don’t have access to water and sanitation, to education or health coverage, the income threshold is not the end of poverty,” Phillips said.

Even to get beyond the very low poverty lines they have, however, growth will not be enough if it is not more evenly shared, he said.

“The world can overcome poverty and ensure dignity for all if political leaders find the courage to challenge inequality by boosting jobs, increasing minimum wages, providing universal public services, stopping tax dodging and tackling climate change.”

Governments need to stand up to corporate interests who are now so powerful that they are not only the sole beneficiaries of global rigged rules but the co-authors of them, he argued.

“It’s clear that governments will only take on the power of money if they are challenged by the power of the people.”

Still, the good news is that the movement to tackle inequality and confront plutocracy is growing, declared Phillips.

Martens told IPS lessons from the MDGs show that development goals are only useful if they are linked to clear commitments by governments to provide the necessary means of implementation.

That’s why the Addis Ababa Conference on Financing for Development (FfD), scheduled to take place in Ethiopia next week, is of utmost importance.

To avoid the complete failure of this conference, he said, all governments have to accept that they have common but differentiated responsibilities to provide the necessary means to implement the SDGs; and they have to strengthen the U.N. substantially in international tax cooperation by establishing an intergovernmental tax body within the U.N.

Meanwhile the Millennium Development Goals Report 2015 found that the 15-year effort to achieve the eight aspirational goals set out in the Millennium Declaration in 2000 was largely successful across the globe, while acknowledging shortfalls that remain.

The data and analysis presented in the report show that, with targeted interventions, sound strategies, adequate resources and political will, even the poorest can make progress.

Highlighting some of the shortcomings, the report said that although significant gains have been made for many of the MDG targets worldwide, progress has been uneven across regions and countries, leaving significant gaps.

Conflicts remain the biggest threat to human development, with fragile and conflict-affected countries typically experiencing the highest poverty rates.

Gender inequality persists in spite of more representation of women in parliament and more girls going to school.

Women continue to face discrimination in access to work, economic assets and participation in private and public decision-making, according to the report.

Despite enormous progress driven by the MDGs, about 800 million people still live in extreme poverty and suffer from hunger.

Children from the poorest 20 per cent of households are more than twice as likely to be stunted as those from the wealthiest 20 per cent and are also four times as likely to be out of school. In countries affected by conflict, the proportion of out-of-school children increased from 30 per cent in 1999 to 36 per cent in 2012, the report said.

Edited by Kitty Stapp

The writer can be contacted at thalifdeen@aol.com

Shefali Das, a commercial sex worker in India, hopes that legalization will also bring safer working conditions for women in the trade, including protections against harassment from clients and law enforcement officers. Credit: Sujoy Dhar/IPS

By Sujoy Dhar
NEW DELHI, Jun 8 2015 (IPS)

Although forced prostitution and trafficking of women remains a huge challenge in India, health experts, policy-makers and legal advocates say that most of the country’s estimated four million commercial sex workers join the trade of their own free will.

While finding alternative employment and providing economic and social safety nets to poor women as a means of diverting them away from the sex trade, advocates say that a more important step is legalizing the industry as a first step to making it a safer, healthier occupation.

India’s Four Million Sex Workers Demand Equal Labour Rights from IPS News on Vimeo.

If current urbanisation trends continue, an additional 500 million people could be living in cities in the Asia-Pacific region by 2020. Credit: Padmanaba01/CC-BY-2.0

By Kanya D'Almeida
UNITED NATIONS, May 14 2015 (IPS)

Home to an estimated 3.74 billion people, the Asia-Pacific region holds over half the global population, determining to a great extent the level of economic stability, or chaos, in the world.

This year’s edition of the Economic and Social Survey of Asia and the Pacific, the flagship publication of the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP), has mostly good news for the region – lauding growth achievement “albeit in a somewhat uneven manner.”

Average real incomes per capita in developing economies of the Asia-Pacific region have doubled since the early 1990s, with China witnessing a seven-fold increase in income per capita since 1990. -- United Nations Economic and Social Commission for Asia and the Pacific (ESCAP)
Growth has remained steady – with developing nations in the region showing a slight increase to 5.9 percent growth, up from 5.8 percent last year.

The survey also states that average real incomes per capita in developing economies of the region have doubled since the early 1990s, with China witnessing a seven-fold increase in income per capita since 1990, and Bhutan, Cambodia and Vietnam seeing their own real incomes triple in the same time period.

Although China’s growth is expected to fall to seven percent in 2015, India’s growth of 8.1 percent – an increase from 7.4 percent last year – could offset any impacts of its neighbor’s “planned moderation”, while Indonesia, the world’s fourth most populous nation is projected to see growth rise from five to 5.6 percent this year.

But the spoils of growth have not been evenly shared.

According to the report, “income inequality has increased […] especially in the major developing countries, particularly in urban areas.” Overall, since the 1990s, the Gini index – a measure of income inequality on a scale of 0-100 – has risen from 33.5 to 37.5 percent for the region as a whole.

And while experts praised the region for halving the number of people living on 1.25 dollars a day, ahead of the 2015 deadline laid out at the launch of the Millennium Development Goals (MDGs) in 2000, a closer look at poverty in the region suggests that there is less to celebrate and far more to tackle.

Poverty: How much has changed since 1990?

Estimates prepared by ESCAP in the 2014 Statistical Yearbook for Asia and the Pacific reveal that the number of people in the region living on less than 1.25 dollars a day fell from 52 percent in 1990 to 18 percent in 2011 – a reduction from 1.7 billion to 772 million people.

While this is a tremendous improvement, it does not change the fact that too many millions are still eking out an existent on practically nothing, while a further 40 percent of the region’s population, some 933 million people – although not classified as the “poorest of the poor” – are in similarly dire straits, earning less than two dollars a day.

The 2014 annual statistical publication of the Asian Development Bank (ADB) takes an even deeper look at poverty statistics in the region, suggesting that the gains made in the past two decades may not be as bright as they seem.

According to the Bank’s sub-regional overview of declining extreme poverty, East Asia drove the drop in numbers with a 48.6-percent decline, followed by a 39-percent drop in Central and West Asia, 31 percent in Southeast Asia and 19 percent in South Asia.

However, the Bank highlighted three reasons for why the conventional 1.25-dollar poverty line is an inadequate measure of the costs required to maintain a minimum living standard by the poor: “Updated consumption data specific to Asia’s poor; the impact of volatile and rising costs associated with food insecurity; and the region’s increasing vulnerability to natural disasters, climate change, economic crises, and other shocks.”

By increasing the base poverty line to 1.51 dollars per person per day, as well as factoring in the impacts of food insecurity and vulnerability to natural disasters and other shocks, Asia’s extreme poverty rate shoots up to 49.5 percent of the population, or roughly 1.7 billion people.

Inclusive growth

In addition to poverty, the ESCAP survey broke down major challenges facing each particular sub-region, including “excessive dependence on natural resources and worker remittances for economic growth in North and Central Asia […]; employment and climate-related challenges in Pacific island developing countries […]; macroeconomic imbalances and severe power shortages in South and South-West Asia […]; and weaknesses in infrastructure and skilled labour shortages in South-East Asia.”

Since the financial crisis of 1997, for instance, infrastructure investment in Indonesia, Malaysia, the Philippines, Thailand and Vietnam fell from 38 billion during the year of the crash to 25 billion in 2010.

Infrastructure is desperately needed to improve basic services for the poor, including better transport networks and energy grids.

According to some estimates the sub-regions of South and South-West Asia need an estimated 400 billion dollars annually for power generation. Only 71 percent of South Asians have access to electricity, compared to 92 percent of those living in East and North-East Asia.

Financing for infrastructure is also desperately needed to improve access to water and sanitation, a huge problem in the region where 41 percent of the population does not have access to toilets and 75 percent do not have access to piped water, according to ESCAP.

Further demands for infrastructure are driven by the rapid rate of urbanisation, with ESCAP suggesting that the region will need upwards of 11 trillion dollars over the next 15 years to deal with the stresses of urbanisation and prepare for huge population shifts.

The year 2012 saw 46 percent of the Asia-Pacific population dwelling in urban areas, but current growth rates indicate that by 2020, that number could rise to 50 percent, meaning an additional 500 million people will reside in the region’s cities by the end of the decade.

The title of this year’s survey, ‘Making Growth More Inclusive for Sustainable Development’, begs a review of the region’s level of inclusivity, particularly of women and young people in the labour force and political ranks.

Sadly the results are disappointing: in the Asia-Pacific region as a whole, women constitute just 18 percent of national parliamentarians, while one-third of countries in the ESCAP region have less than 10 percent female representation in parliament.

For youth, too, the situation is bleak, with seven out of 13 countries surveyed showing youth unemployment rates higher than 10 percent – including a 19.5-percent youth unemployment rate in Sri Lanka.

“To enhance well-being, countries need to go beyond just focusing on ‘inequality of income’ and instead promote ‘equality of opportunities’,” ESCAP Executive Secretary Shamshad Akhtar said Thursday.

She also said the survey underscores the need for countries to adopt policies that will foster inclusive growth, both to ensure outstanding MDG commitments are met and pave the way for an ambitious post-2015 sustainable development agenda.

Edited by Kitty Stapp

Indonesia has one of the highest rates of income inequality in Southeast Asia, according to the World Bank. Credit: Sandra Siagian/IPS

By Sandra Siagian
JAKARTA, May 13 2015 (IPS)

Every afternoon, Wahyu sets up his wooden food cart by the side of a busy road in Central Jakarta to sell sweet buns, known as ‘bakpao’, to people passing by. In a good month, the street vendor can make around 800,000 rupiah, which amounts to roughly 62 dollars.

Across the road from where Wahyu hawks his wares stands one of the many malls that dot Indonesia’s capital city, home to 9.6 million people, filled with high-end designer labels like Louis Vuitton, Chanel and Gucci.

"We [...] need the government to take a welfare approach to make sure that our low-income workers are protected." -- Said Iqbal, chairman of the Indonesian Trade Union Confederation (KSPI)
Despite Wahyu’s position literally opposite the entrance to the plaza, it’s unlikely he will ever step foot inside it, let alone shop there.

Indonesia’s wealth gap has widened over the years, with the nation’s Central Statistics Agency (BPS) revealing that the country’s Gini index – a ratio measuring wealth distribution on a scale of 0-1 – increased from approximately 0.36 in 2012 to 0.41 in 2014.

While some are making their fortunes in this Southeast Asian nation of 250 million people, scores are languishing in destitution.

An estimated 28 million people live below the poverty line, and half of all households are grouped at or below the poverty line, set at 292,951 rupiah (24.4 dollars) per month, according to the World Bank.

When Indonesia’s President Joko Widodo came into office last October, he pledged to work towards minimising the country’s income inequality.

At the same time, the president, who is fondly known as Jokowi, emphasised that he was keen to boost the investment appeal of the world’s fourth most populous country, a plan that has some trade unions on edge, fearing the impact of unchecked foreign investment on a vulnerable workforce.

“We agree with the government’s plan to invite investors as we need investment for economic growth in the country. We support him,” explains Said Iqbal, the chairman of the Indonesian Trade Union Confederation (KSPI).

“But we also need the government to take a welfare approach to make sure that our low-income workers are protected,” he tells IPS.

The nation’s average minimum wage is around 1.5 million rupiah, the equivalent of 115 dollars, according to data from BPS.

Each province or district sets their own minimum wage in line with the amount needed for workers to achieve a decent standard of living. The current rate for the capital city is 2.7 million rupiah per month, about 206 dollars, a figure that labour unions argue is not in line with the rising costs of basic needs.

“Thailand has a minimum wage equivalent to 3.2 million rupiah (244 dollars), Philippines at an equivalent of 3.6 million rupiah (274 dollars) and in Malaysia it’s more than three million rupiah (228 dollars),” explains Iqbal, who joined thousands of workers in Jakarta this past May Day to demand higher wages.

“We [labour unions] have met with Jokowi and we welcome his vision. But we haven’t seen any action; we need him to implement policies. We need to see wages increased to reflect the increase in oil prices and consumer goods.”

As pointed out in a January 2015 report by the International Labour Organisation (ILO), one in three regular employees – or 33.6 percent of the total workforce engaged in full-time work – receives a low wage.

While low wages in some emerging economies can symbolise a workforce about to move into a higher income bracket, “for many Indonesian workers low-wage employment tends to be the norm, rather than a springboard,” the ILO found.

The report also found that 45.9 percent of regular wage employees were “receiving wages below the lowest wage that is permissible by law in August 2014.”

Sharan Burrow, the general secretary of the International Trade Union Confederation (ITUC), tells IPS that Indonesia is not doing enough to tackle the country’s rising inequality or its growing informal economy – two things she says pose economic and social risks.

“The unions here have fought the low-wage culture for many years […]; it is still not a wage on which people can live with dignity against rising costs for basic needs,” Burrow, who was in Jakarta for the May Day celebrations, explains.

“Likewise, social protection is still not deep enough and is not universal.”

According to the World Bank, employment growth has been slower than population growth, while “public services remain inadequate by middle-income standards.”

Health and infrastructure indicators are also poor, and the country is a ways off from achieving the Millennium Development Goals (MDGs), the United Nation’s poverty-reduction blueprint that is set to expire at the end of the year.

For instance, the country continues to be plagued by high infant and maternal mortality ratios, with 228 infant deaths and 190 maternal deaths for every 100,000 live births.

Meanwhile, only 68 percent of the population has access to improved sanitation facilities, far short of the MDG target of 86 percent.

With 153.2 million people – or 62 percent of the total population – living in rural areas without easy access to medical, educational and financial institutions, experts say there is an urgent need for the country to devise schemes that will allow a more equitable sharing of wealth among its people.

While some analysts say Indonesia’s low wages act as a magnet for investment, business insiders disagree.

“The business community is aware that low wages are no longer the attraction they used to be,” says Keith Loveard, a senior risk analyst with Concord Consulting in Jakarta, adding that increased inequity over the past decade has seen the bottom 50 percent of the population make very few gains.

The government could reverse this tide by tackling bureaucratic bottlenecks in various sectors.

According to Loveard, “Indonesia’s logistics costs make up more than a quarter of production costs and the only way companies can deal with that is to squeeze workers. So realistically, until you lower logistics costs with better infrastructure and cut the red tape, it’s very difficult to do business in areas such as manufacturing that create lots of jobs.”

Indonesia’s manufacturing sector is the second largest contributor, after the service sector, to regular wage employment and a strong factor for economic and employment growth in the country, according to the ILO.

Organisations like the World Bank, which estimate that Indonesia has one of the fastest rising rates of income inequality in the Southeast Asian region, say that unless the country adopts social protection programmes for the poorest people, and invests in infrastructure that will enhance their productive capacity, Indonesia will find itself losing social, political and political cohesion in the years to come.

Edited by Kanya D’Almeida

In peacetime Sri Lanka, women still bear a heavy load in looking for jobs and tending to their families. Credit: Adithya Alles/IPS

By Ranjit Perera
COLOMBO, May 5 2015 (IPS)

When Rosy Senanayake, Sri Lanka’s minister of state for child affairs, addressed the U.N. Commission on Population and Development (CPD) in New York last month, she articulated both the successes and shortcomings of gender equality in a country which prided itself electing the world’s first female head of government: Mrs. Sirimavo Bandaranaike in July 1960.

After surviving a 26-year-long separatist war, which ended in 2009, Sri Lanka has been registering relatively strong economic growth, and also claiming successes in its battle against poverty and hunger."Women also bear primary responsibility for care work – which creates multiple and intersecting forms of discrimination that limits the opportunities for their full integration into the workforce.” -- Rosy Senanayake

As the U.N.’s Millennium Development Goals (MDGs) move towards their targeted deadline in December 2015, Sri Lanka says it has reduced poverty from 26.1 percent in 1990-1991 to 6.7 percent in 2012-2013 – achieving the target of cutting back extreme poverty by 50 percent far ahead of end 2015.

Still, it still lags behind in gender equality – even as 51.8 percent of the country’s total population (of 21.8 million) are women, with only 34 percent comprising its labour force.

Pointing out that Sri Lanka has enjoyed significant progress in its social and economic indicators, Senanayake told IPS, it is also one of the few countries in Asia that has a sex ratio favourable to women.

But Sri Lanka’s advancement, in light of changing demographics, will ultimately depend on its ability to enable women and young people to be active participants in the country’s post-2015 development agenda and the U.N.’s proposed Sustainable Development Goals (SDGs).

“This requires an increase in sustained investment targeted at gender equality and social protection,” she added.

Addressing a meeting in Colombo last week, visiting U.S. Secretary of State John Kerry praised the women of Sri Lanka for playing a critical role in helping the needy and the displaced.

“They’re encouraging people to build secure and prosperous neighbourhoods. They are supporting ex-combatants and survivors of sexual and gender-based violence, and they’re providing counseling and other social services. And these efforts are absolutely vital and we should all support them,” he said.

“But we also have to do more than that,” he noted.

“Here, as in every country, it’s crystal clear that for any society to thrive, women have to be in full control – they have to be full participants in the economics and in the political life. There is no excuse in the 21st century for discrimination or violence against women. Not now, and not ever,” Kerry added.

The country’s positive development goals are many and varied: Sri Lanka has almost achieved universal primary education; the proportion of pupils starting grade 1, who reach grade 5, is nearly 100 percent; the unemployment rate has declined to less than four percent: the maternal mortality rate has declined from 92 deaths per 100,000 live births in 1990 to 33.3 in 2010; and the literacy rate of 15- to 25-year-olds increased from 92.7 percent in 1996 to 97.8 percent in 2012, according to official figures released by the government.

U.N. Resident Coordinator in Colombo Subinay Nandy says since the end of the separatist war, “Sri Lanka has graduated from lower to middle income status.”

Still, despite strong health and education results, Sri Lanka struggles to provide gender equality in employment and political representation.

Referring to the MDG country report produced by the government, Nandy says, Sri Lanka, overall, is in a strong position. The good performance noted in the report has been sustained and Sri Lanka has already achieved many of the MDGs and is mostly on track to achieve the others, he said.

But the negatives are also many and varied.

The proportion of seats held by women in the national parliament “remains very low”; the number of HIV/AIDS cases, despite low prevalence, is gradually increasing; tuberculosis remains a public health problem; there has been an increase in the incidence of dengue fever; and Sri Lanka’s debt-services-to-exports ratio remains relatively high compared to other developing countries in the Asia-Pacific region.

The eight MDGs spelled out by the United Nations include eradicating extreme poverty and hunger; achieving universal primary education; promoting gender equality and empowering women; reducing child mortality; improving maternal health; combatting HIV/AIDS, malaria and other diseases; ensuring environmental sustainability and developing a global partnership for development.

The targeted date to achieve these goals is 2015.

Senanayake told the CPD unemployment amongst women is more than twice as high as unemployment amongst men, while women migrant workers and women in the plantation and export processing sectors bring in significant foreign exchange earnings to the country.

However, a majority of women who participate in the labour force do so in the informal sector.

“This leaves them vulnerable to exploitation and abuse during their course of employment. Women also bear primary responsibility for care work – which creates multiple and intersecting forms of discrimination that limits the opportunities for their full integration into the workforce,” she said.

Sri Lanka recognises that inclusive development rests on ensuring equality of opportunity in work.

“As such, we are firmly committed to making the necessary legal and structural investments to bolster a decent work agenda in marginalised sectors,” she noted.

These investments demand a broader discussion on the value of female participation in development.

This includes the availability and promotion of sexual and reproductive health and rights; robust mechanisms to prevent violence against women and girls; and strengthening measures to bring perpetrators of violence to justice.

These, she said, are critical in ensuring Sri Lanka’s ‘demographic dividend’ can be leveraged.

Meanwhile, the introduction of family planning services by the Family Planning Association was well integrated into maternal and child health services and later expanded to reduce the stigma surrounding contraception.

This strategy accounted for more than 80 percent decline in fertility, according to Senanayake.

Additionally, the government of Sri Lanka, through her Ministry, has introduced a scheme that provides a monthly nutritional supplement to all pregnant women in the country to reduce rates of anaemia, low birth weight and malnutrition – which affects both mother and baby.

Still, Sri Lanka faces the problem of unsafe abortions, unintended and teenage pregnancies, which pose significant challenges to the health and well-being of women and adolescents.

In this respect, she said, strengthening comprehensive reproductive education through school curriculum can help young people access accurate information on gender, sexuality, sexually transmitted infections including HIV and increase their awareness on the effective use of contraception.

Currently over 23.4 percent households are headed by women.

To combat these demographic pressures, Prime Minister Ranil Wickremesinghe has set up a National Committee on Female-Headed Households and a National Centre for Female Headed Households – enabling female heads of households to integrate into the workforce and access sustainable livelihoods.

Edited by Kitty Stapp

Children on their way to school in Kibera, the largest slum in Nairobi. Credit: Save the Children

By Valentina Ieri
UNITED NATIONS, May 5 2015 (IPS)

It’s called the urban survival gap – fuelled by the growing inequality between rich and poor in both developing and developed countries – and it literally determines whether millions of infants will live or die before their fifth birthday.

Save the Children’s annual report on the State of the World’s Mothers 2015 ranks 179 countries and concludes that that “for babies born in the big city, it’s the survival of the richest.”

Speaking from the launch at U.N. Headquarters, Carolyn Miles, president and CEO of Save the Children, said that for the first time in history, more families are moving into cities to give their children a better life. But this shift from a rural to an urban society has increased disparities within cities.

“Our report reveals a devastating child survival divide between the haves and have-nots, telling a tale of two cities among urban communities around the world, including the United States,” Miles added.

The document estimates that 54 percent of the world’s population lives in urban areas, and by 2050 the concentration of people in cities will increase to 66 percent, especially in Asia and Africa.

The World Health Organisation (WHO) says that nearly a billion people live in urban slums, shantytowns, on sidewalks, under bridges and along railroad tracks.

Rizelle, 17, and her three-week-old baby. Rizelle lives in a squatted home under a bridge in San Dionisio, Indonesia. Photo credit: Save the Children

While women living in cities may have easier access to primary health care, including hospitals, many governments have been unable to keep up with this rapid urban growth. One-third of all urban residents – over 860 million people – live in slums where they face lack of clean water and sanitation, alongside rampant malnutrition.

Miles said that despite the progress made on reducing urban under-five mortality around the world, the survival divide between rich and poor children in cities is growing even faster than that of poor children in rural areas.

In most of the developing nations surveyed, children living at the bottom 20 percent of the socioeconomic ladder are twice as likely to die as children in the richest 20 percent, and in some cities, the disparity is much higher.

Robert Clay, vice president of the health and nutrition at Save the Children, explained that urban poor are more transient, as they tend to have unsteady jobs and living situations. In rural areas, many people at least have land and food, and a stronger support system within the community.

“In urban areas this doesn’t exist. Urban cities are overcrowded by many ethnic groups living side by side so it’s a bit harder to bond, communicate and build trust. It’s the hidden population that is more problematic to reach,” Clay told IPS.

He said lack of data makes it harder for charities like Save the Children, or national and municipal governments, to access these marginalised communities.

The 10 developing countries with the largest child survival divide are Bangladesh, Cambodia, Ghana, Kenya, India, Madagascar, Nigeria, Peru, Rwanda and Vietnam.

Among the 10 worst wealthy capital cities for child survival, out of the 25 studied, Washington D.C. (U.S.) was number one, followed by Vienna (Austria), Bern (Switzerland), Warsaw (Poland), and Athens (Greece).

The river that runs through the Kroo Bay slum community in Sierra Leone. Credit: Save the Children

By looking at the mother’s index rankings of 2015, based on five criteria – maternal health, children’s well-being, educational status, economic status and women political status, Save the Children says that conditions for mothers and their children in the 10 bottom-ranked countries – all but two of them in West and Central Africa – are dramatic, as nations struggle to provide the basic infrastructure for the health and wellness of their citizens.

“On average, in these countries one woman out of 30 dies from pregnancy-related causes, and one child out of eight dies before his or her fifth birthday,” Miles said.

Globally, under-five mortality rates have declined, from 90 to 46 deaths per 1,000 live births. However, these numbers, says the organisation, mask the fact that child survival is strictly linked to family wealth, and miss addressing the conditions of poverty and unhealthy life of slums.  

Positively, the report has also uncovered some successful solutions found by governments to reduce maternal and infant mortality, and close the inequality gap between rich and poor children in their own countries. The most successful countries are Ethiopia (Addis Ababa), Egypt (Cairo), Guatemala (Guatemala City), Uganda (Kampala), Philippines (Manila) and Cambodia (Phnom Penh).

“Ethiopia, which recently had accelerated economic growth, managed to develop effective targeting policies, and provided accessible preventive and curative health care for poor mothers and children,” Clay said.

“[Ethiopia] should be a blueprint for other countries, which should bring access to communities in slums so that local people are not left behind,” he underlined, adding that hiring urban outreach workers who can go into the communities, speak the language of the people living there and understand their conditions and needs is vital.

Save the Children is calling on national governments worldwide to find new policies and plans to invest in a universal maternal and infant health care, develop cross-sectoral urban plans, and reduce urban disadvantages, and to increase the focus on the Sustainable Development Goals in the post-2015 development agenda, concluded Miles.

Edited by Kitty Stapp

Phumzile Mlambo-Ngcuka. Photo Courtesy of UN Women

By Phumzile Mlambo-Ngcuka
UNITED NATIONS, Apr 27 2015 (IPS)

Our world is out of balance. It is both wealthier and more unequal today than at any time since the Second World War.

We are recovering from a global economic crisis – but that recovery has been jobless. We have the largest cohort ever of educated women, yet globally women are struggling to find work. Unemployment rates are at historic highs in many countries, including those in the Middle East and North Africa, in Latin America and the Caribbean as well as in southern Europe.Our globalised economy seems to be working at cross-purposes with our universal vision of women’s rights; it is limiting, rather than enabling them.

Where women do have jobs, globally they are paid 24 per cent less than men, on average. For the most part, the world’s women are in low-salaried, insecure occupations, like small-scale farming, or as domestic workers – a sector where they comprise 83 per cent of the workforce.

Why isn’t the global economy fit for women?

In our flagship report Progress of the World’s Women 2015-2016: Transforming Economies, Realizing Rights, we investigate what this failure means – and propose solutions.

We take a fresh, holistic look at both economic and social policies and their implications for the entire economy. We look particularly at the ‘invisible’ economy of unpaid care and domestic work that anchors all economies and societies.

Conventional measures like GDP have historically been blind to a large proportion of the work women and girls do, and unhearing of the voices of those who would wish to allocate public resources to their relief, for example through investments in accessible water and clean energy.

We suggest the need to apply a human rights lens to economic problem-solving. We propose specific, evidence-based solutions for action by both government and the private sector, to shape progress towards decent, equally paid jobs for women, free from sexual harassment and violence, and supported by good quality social services.

Our public resources are not flowing in the directions where they are most needed: for example to provide safe water and sanitation, quality health care, and decent child- and elderly-care services. Yet water is essential, families still have to be nourished, the sick still have to be tended, children brought up, and elderly parents cared for.

Where there are no public services, the deficit is borne primarily by women and girls. This is a care penalty that unfairly punishes women for stepping in when the State does not provide resources and it affects billions of women the world over.

Data from France, Germany, Sweden and Turkey suggest that women earn between 31 and 75 per cent less than men over their lifetimes. We need policies that make it possible for both women and men to care for their loved ones without having to forego their own economic security, success and independence.

Our globalised economy seems to be working at cross-purposes with our universal vision of women’s rights; it is limiting, rather than enabling them. Where there is no choice, there are few rights.

But there are solutions. The report proposes a number of specific ways in which to mobilise resources to pay for public services and social transfers: for example by enforcing existing tax obligations, reprioritising expenditure and expanding the overall tax base, as well as through international borrowing and development assistance.

Global corporations also have a central role to play by being employers that offer equal pay and opportunities. Shareholders can and should ask corporations to act with responsibility to the countries in which they operate. Annual tax revenue lost to developing countries due to trade mispricing, just one strategy used by corporations to avoid tax, is estimated at between 98 and 106 billion dollars. This is nearly 20 billion more than the annual capital costs needed to achieve universal water and sanitation coverage.

With the right mix of economic and social policies, governments can make transformative change: they can generate decent jobs for women and men and ensure that their unpaid care work is recognised and supported. Well-designed measures such as family allowances and universal pensions can enhance women’s income security, and their ability to realise their potential and expand their life options.

Finally, macroeconomic policies can and should support the realisation of women’s rights, by creating dynamic and stable economies, by generating decent work and by mobilising resources to finance vital public services.

Ultimately, upholding women’s rights will not only make economies work for women, it will also benefit societies as a whole by creating a fairer and more sustainable future.

Progress for women is progress for all.

Edited by Kitty Stapp

Excerpt:

The land by Boegbor, a town in district four in Grand Bassa County, Liberia, has been leased by the government to Equatorial Palm Oil for 50 years. Credit: Wade C.L. Williams/IPS

By Soren Ambrose
NAIROBI, Apr 23 2015 (IPS)

Parents in despair because they can’t pay the fees at the privatised neighbourhood school…

Families left without healthcare because the mining company that pollutes their river also dodges the taxes that could pay for their treatment…

Women getting four hours of sleep a night as they try to balance caring for their families and homes with earning income…

Soren Ambrose

Whole communities thrown off their land to make way for a foreign company…

Workers paid so little by employers that they’re suffering malnutrition.

These are just a few of the reports I’ve heard from my colleagues in recent months.

We see people frustrated by the surge in the power of the plutocrats.

Plutocracy is a society or a system ruled and dominated by a small minority of the wealthiest. The rich have always been powerful; some element of plutocracy has been present in all societies.

But the degree of control being exercised now; the number of the ultra-rich essentially buying political power; the nearly impossible persistence required to overcome the legal, public relations, and technical resources controlled by corporations and the richest individuals; the much denser concentration of wealth in even the largest countries; and the global nature of the resources, power, and connections being accumulated have combined to foreclose meaningful democratic options and space for a life independent of the materialistic values of the plutocracy.The economy no longer facilitates human society; humans live to serve the economy.

The logic that undergirds all of this – the greed for money, power, and control – is antithetical to preserving an environment in which living things can thrive. Through most of human history we have endured various unbalanced political and social systems.

Today’s market economy has roots going back centuries, but only in this one has it become so monolithic, with virtually the entire world under its spell.

We are living in an age of hyper-capitalism: we have gone beyond industrialisation and value-addition to a point where the rules are written by the financiers, and the finance industry, rather than a sector that actually makes something, has become arguably the most politically powerful industry in history.

A brief period of relative equality in the richer countries after World War II gave way from the late 1970s to a powerful ideology of competition, unending growth, and unhindered profit. This ideology was charted deliberately by institutes lavishly funded by aspiring plutocrats.

The denial of limits, the privileging of competition and profit over cooperation and public goods, and the capitulation of governments to the power of money has made the modern plutocracy a dominant reality, and one that must be reversed.

Commentators now routinely speak of how people can “contribute to the economy.” The economy no longer facilitates human society; humans live to serve the economy. “Freedom” has been reconfigured to refer to consumer choice rather than the ability to determine how to order one’s life.

A few years ago there was considerable debate about the concept of “peak oil” – the possibility we were reaching the beginning of the end of usable petroleum supplies. We may be reaching a more dangerous point: peak plutocracy, where society and the environment can sustain no more concentration of power and resources.

So it is worrying to hear so consistently from colleagues around the world the extent to which the power of people is being curtailed by the people with power.

We see the evidence of peak plutocracy in:

• the so far largely successful efforts of business interests to prevent meaningful action on climate change;

• the push for high-input, high-tech, restricted-ownership agriculture that excludes smallholder farmers – a great portion of them women — who feed most of the world’s people;

• the collusion of governments and companies in taking control of land and natural resources from communities in order to generate profits for privileged outsiders;

• the “race to the bottom” among governments to sacrifice revenues through blanket “tax holidays” in order to lure foreign investment, even when the benefits are unclear or negligible;

• the failure of governments to establish laws that protect workers from abuses ranging from trafficking to unlivable wages to unacceptably risky working conditions, with women workers in the most precarious, low-paid and inhumane jobs;

• the failure to recognise the systematic abuse of women’s rights in many areas – but in particular the deep uncompensated subsidies women provide to all economies with their unpaid and low-paid care work that keep families and societies functioning;

• the pressure put on countries – and more recently the collusion between governments and companies – to change commercial and consumer-protection laws so that foreign companies can dominate markets;

• the use of coercion, including violence, by powerful elites in private enterprises, fundamentalist movements, and repressive regimes to control women’s bodies and sexual and reproductive choices, their labour, mobility and political voice;

• the pressure to privatize schools at the expense of decent public education, despite the complete absence of evidence that the results will be beneficial to anyone beside the owners;

• the unwarranted scorn directed at the public sector, and the pervasive recourse to the notion of “private sector led development” by most donor countries and inter-governmental institutions, even in the absence of positive models

• the fetishization of foreign direct investment in low-income countries despite compelling evidence that no country has achieved sustainable development with foreign capital;

• the increasing congruence of interests among governments, corporations, and elites in limiting the freedom of action of social movements and public interest groups, constricting political space in all parts of the world;

• the increasing domination of wealthy corporations and individuals in United Nations debates and processes.

• the brazen ideological defense of inequality and massive concentration of power and resources by wealthy individuals and the institutes they fund;

• the increasing number of disasters and emergencies are turned into profit opportunities, as affected areas are remade according to the plutocrats’ rules.

• the refusal of governments to combat the global youth unemployment crisis with public jobs programs to address the widely-acknowledged looming crisis of deteriorating infrastructure;

• the fallacy of scarcity revealed by the capacity of governments to find massive public financial resources for war and bank bailouts, but seldom for programs that would employ people, combat hunger and disease, and foster renewable energy.

The hyper-concentration of wealth in the hands of the few has corrupted democratic systems, in rich countries as well as in poor ones.

We need to democratise power. But that doesn’t mean just better monitoring of elections. It means making power more horizontal, more accessible to more people, the people who are affected by the decisions made.

There is no one-off recipe for making this happen. It has to happen over and over again, every day, everywhere, with increasing connections so that we won’t be crowded out by those with money and influence. We have to occupy space and not leave it, and then occupy some more.

Edited by Kitty Stapp

Excerpt:

A shantytown in Guatemala. UNDP estimates suggest that more than 1.5 million people in the Latin American region will fall into poverty by the end of 2015. Credit: Danilo Valladares/IPS

By Jessica Faieta
NEW YORK, Feb 23 2015 (IPS)

Recent new data show a worrying picture of Latin America and the Caribbean. Income poverty reduction has stagnated and the number of poor has risen — for the first time in a decade — according to recent figures from the Economic Commission for Latin America and the Caribbean.

This means that three million women and men in the region fell into poverty between 2013 and 2014. Given the projected economic growth for this year, at 1.3 percent according to the International Monetary Fund (IMF) figures, our U.N. Development Programme (UNDP) estimates suggest that in 2015, more than 1.5 million people will also fall into poverty by the end of this year.We need to invest in the skills and assets of the poor and vulnerable — tasks that may take years, and in many cases, an entire generation.

They could be coming from the nearly 200 million vulnerable people in the region — those who are neither poor (living on less than four dollars a day) nor have risen to the middle classes (living on 10-50 dollars a day). Their incomes are right above the poverty line but still too prone to falling into poverty as soon as a major crisis hits, as another recent UNDP study showed.

Up and down the poverty line

Our analysis shows a clear pattern: what determines people to be “lifted from poverty” (quality education and employment) is different from what “avoids their fallback into poverty” (existence of social safety nets and household assets).

This gap suggests that, alone, more economic growth is not enough to build “resilience”, or the ability to absorb external shocks, such as financial crisis or natural disasters, without major social and economic losses. We need to invest in the skills and assets of the poor and vulnerable — tasks that may take years, and in many cases, an entire generation.

Exclusion beyond income

We simulated what would happen if the region grew during 2017-2020 at the same rate as it did during the last decade — that is 3.9 percent annually — yet our estimates show that fewer people in Latin America and the Caribbean would be lifted from poverty than in the previous decade.

While an average of 6.5 million women and men in the region left poverty every year during 2003 and 2012, only about 2.6 million a year would leave poverty behind (earning more than four dollars a day) between 2017 and 2020.

Clearly, ‘more of the same’ in terms of growth — and public policies — will no longer yield ‘more of the same’ in poverty and inequality reduction, according to our analysis. There are two reasons: easy sources of increased wages are declining and fiscal resources, crucial to expand social safety nets, have shrunk.

What lies ahead are harder challenges: addressing exclusion, discrimination and historical inequalities that are not explained by income alone.

Fundamentally, progress is a multidimensional concept and cannot simply reflect the idea of living with less or more than four or 10 dollars a day. Wellbeing means more than income, not a consumerist standard of what a “good life” entails.

These are central elements to our next Human Development Report for Latin America and the Caribbean, which we are now preparing. It will also include policy recommendations that help decision makers lead an agenda that not only focuses on growth recovery and structural adjustment, but also redefines what is progress, development and social change in a region of massive inequalities and emerging and vulnerable middle classes.

Edited by Kitty Stapp

Excerpt:

A youth smokes diamba (marijuana) at a gang base in Sierra Leone’s capital Freetown. Credit: Tommy Trenchard/IPS

By Josh Butler
UNITED NATIONS, Feb 6 2015 (IPS)

Global youth unemployment may be “six or seven times” what the International Labor Organisation’s (ILO) latest figures state, due to what a youth advocacy group calls a flawed system of assessment.

The ILO recently released its 2015 World Employment and Social Outlook (WESO) report, and presented the findings to the United Nations Friday.“In unequal societies, democracies are more likely to be corrupted, workers are more likely to be exploited and abused, and the safety net for the poor or vulnerable is weakened." -- Dr. Marjorie Wood

One of the report’s major findings is the worldwide unemployment rate among 15 to 24-year-olds of 13 percent, or 74 million youths, is set to rise.

William Reese, CEO of the International Youth Foundation, thinks that figure is significantly underestimated.

“I’m not surprised by that number, because it is probably much higher than they state. We’ve seen reports of over 70 million young people unemployed, but the real number is probably six or seven times that,” Reese said.

He said a flawed system of assessing unemployment led to employment figures far below the reality.

“Those statistics are typically assessing people who are looking for jobs, so if you’re not looking for work, you’re technically not unemployed. People in poor countries are often underemployed or underpaid,” Reese told IPS.

“Unemployment statistics don’t take that into consideration. People in poor countries do work; if they didn’t, they would die. But in poorer countries, data is even worse.”

The WESO report warns the effects of the 2008 global economic crisis are still heavily impacting nations worldwide, especially developing economies.

The report outlines a widening income and wealth inequality, as well as sluggish economic growth, but while overall global unemployment is steady, youth unemployment is tipped to increase in coming years.

“Youth, especially young women, continue to be disproportionately affected by unemployment,” the report states, saying the 2014 youth unemployment rate was almost three times higher than the overall unemployment rate.

The ILO predicts overall unemployment rates “to decline gradually in developed economies” while at the same time “many countries are projected to see a substantial increase in youth unemployment.”

Ekkehard Ernst, chief of the ILO’s Job Friendly Macroeconomic Policies Team, told IPS slow economic growth was to blame for expected spikes in youth jobless rates.

“Growth is too slow to make a difference in job creation,” Ernst said. “Economies take much longer to recover after a financial crisis than a normal recession. It makes a difference to growth acceleration.”

Global growth has risen slowly for the last two years, from 2.2 percent in 2012 to 2.3 percent in 2013 and 2.5 percent in 2014, but is still well below the pre-crisis levels of around four percent.

Reese said a mismatch of skills was also to blame for rising youth unemployment. He said more young people were gaining tertiary qualifications than ever before – backed up by ILO data saying tertiary education rates have increased in 26 of 30 countries surveyed – but that young people were not gaining qualifications relevant to a changing labor market.

“There are job openings, but companies can’t find people with the right skills. Schools are not asking what the business community needs today. They are teaching what businesses might have wanted five years ago,” Reese said.

“There are more college-educated unemployed in some parts of the world, than high school-educated unemployed. Sometimes, kids today don’t come in with the disposition to work hard or be a team player.”

The ILO reports youth unemployment was especially problematic in Europe, with rates of up to 52 percent in Greece and Spain. The ILO predicts between 2014 and 2019, youth unemployment will rise by up to eight percent in parts of Europe, South America and Africa.

Reese said education facilities needed to be more tuned-in to what the modern job force requires, and to encourage students to think and learn about what is expected from them in the labor market.

“We want young people to get and keep a job. When a middle-class flourishes, democracies flourish,” he said. “All levels of education need to be smarter, and teach academic skills through internships and apprenticeships, to help young people learn things about work that they can’t get in a classroom.”

In 2014, global unemployment stood at 201million people, 1.2 million higher than 2013. That number is expected to rise to 212 million by 2019.

“We’re seeing a huge number of unemployed. The global unemployment rate is around six percent and that won’t shrink any time soon,” Ernst said.

Ernst said, however, that rising unemployment was not necessarily a sign of a poor economic climate. He said rising unemployment in many Asian countries, especially in economies such as China and India, was a sign of a modernising economy, as workers move from stable yet low-paying jobs in rural areas to seek higher paying jobs in urban centres.

“This type of unemployment is a rebalancing of the economy. Asian countries will see an increase in unemployment as they develop, which is a normal process of development,” Ernst said.

“New technology requires jobs be shuffled from one industry to another. China is so big, if they have a higher unemployment rate then that will affect world unemployment figures.

“People are moving from low-income agricultural jobs, to middle-income jobs in manufacturing, and then onto higher incomes in the service industry.”

Rising unemployment and sluggish economic growth is predicted to further widen income and wealth inequality worldwide; the richest 10 percent of the world will hold 30 to 40 percent of total income, while the poorest 10 percent will earn as little as two percent.

Dr. Marjorie Wood, senior global economy associate for the Institute for Policy Studies and managing editor of website Inequality.org, said a suite of socially regressive measures rolled out across the United States and the world had contributed greatly to the deepening income inequality.

“It’s important to look at how workers have been disempowered since the 1970s. Union strength was high at that time, and robust taxes on the wealthy and corporations funded public investments to allow opportunity and mobility for ordinary people,” Wood told IPS.

“We’ve seen a reversal of those, into a system what was much more unequal, with wealth concentrated at the top.”

She said a deepening income inequality would have profound impacts on all facets of life, from democracy and politics to social affairs.

“In unequal societies, democracies are more likely to be corrupted, workers are more likely to be exploited and abused, and the safety net for the poor or vulnerable is weakened,” she said.

The ILO report states social unrest and possible violence is linked to rising inequality and youth unemployment. Social unrest is said to have “shot up” during the financial crisis, and worldwide, currently sits at 10 percent higher than before the crisis.

However, Wood said she was encouraged by a growing call for a federally mandated minimum living wage in the U.S., and worldwide calls for a fairer distribution of income.

“People are not satisfied with rising inequality today, just as they weren’t satisfied 100 years ago in the USA’s first ‘gilded age.’ They addressed it then by fighting back, with a robust labour movement, and I think we will do it again,” she said.

“We’re seeing worker justice movements in many places, where people collectively organise to make change. That is where true political change comes from.”

Edited by Kitty Stapp

By Peter Costantini
SEATTLE, Dec 23 2014 (IPS)

Since his college days, John Schmitt says, he’s been “very interested in questions of economic justice, economic inequality.”

Photo courtesy of John Schmitt

He served a nuts-and-bolts apprenticeship in the engine room of the labour movement, doing research for several unions’ organising campaigns. Today, he’s an influential proponent of new approaches to low-wage work that have reoriented how many economists and policy-makers understand the issue.

Schmitt is a senior economist at the Center for Economic and Policy Research in Washington, DC. He also serves as visiting professor at the Pompeu Fabra University in Barcelona, and was a Fulbright scholar at the Universidad Centroamericana “Jose Simeon Cañas” in San Salvador, El Salvador. He holds degrees are from Princeton and the London School of Economics.

IPS correspondent Peter Costantini interviewed him by telephone and e-mail between August and December 2014.

Q: Among policy prescriptions for reducing income inequality and lifting the floor of the labour market, where do you see minimum wages fitting in?

A: I think the minimum wage is very important. It concretely raises wages for a lot of low and middle-income workers, and it also establishes the principle that we as a society can demand that the economy be responsive to social needs.

It’s a legal, almost palpable statement that we have the right to demand of the economy that it serve us and not that we serve the economy. It’s not the solution, in and of itself, to economic inequality. But it’s an important first step.Two of the last three increases in the minimum wage were signed by Republican presidents, with substantial support from Republicans in Congress. So it’s a very American institution that has had a long history of bipartisan support.

And it’s an easy first step. It’s something that we’ve had in this country since the 1930s, and it has broad political support. It regularly polls way above 50 percent, even among Republicans. And in the population as a whole, 65 to 75 percent of voters support it.

Two of the last three increases in the minimum wage were signed by Republican presidents, with substantial support from Republicans in Congress. So it’s a very American institution that has had a long history of bipartisan support.

And it’s effective in doing what it’s supposed to do, which is raise wages of workers at the bottom. It does exactly what a lot of people think our social policy should do: reward people who work. Almost everybody agrees that if you’re working hard, you should get paid a decent amount of money for that.

Also, it doesn’t involve any government bureaucracy other than a relatively minor enforcement mechanism. Because everybody knows what the minimum wage is. There’s a social norm and expectation that people who work should get at least the minimum wage. [More]

Q: Beginning in the early 1990s, a new approach surfaced that challenged the old contention that minimum wage increases reduce employment among low-wage workers.

A: It was called the New Minimum Wage research. A lot of economists at the time were looking at the experience of states that had increased the minimum wage, and were finding that state increases seemed to have little or no effect on employment.

It caused a lot of controversy, which is still raging. I think the profession has moved a lot towards the belief that moderate increases in the minimum wage, like the ones that we historically have done, have little or no impact on employment.

I think what most economists are persuaded by is that the empirical evidence is not that supportive of large job losses. There’s just a lot of good research out there that consistently finds little or no negative employment effects.

The textbook model for how the labour market works is just a vast oversimplification. It can be useful in some contexts, but it’s not useful to understand a pretty complicated thing, which is what happens when the minimum wage goes up.

One of the key insights is that employers aren’t operating in a competitive labour market nor are employees. There’s the possibility that employers make adjustments in other dimensions besides laying workers off: they raise their prices somewhat, or they cut back on hours [without layoffs].

And from a worker’s point of view, if they raise your salary by 20 percent and they cut your hours by five or 10 percent you’re still better off, right? Because you’re getting paid more money and you’re working fewer hours. So there are a lot of ways that firms can adjust to minimum wage increases other than laying people off. [More]

Q: So from a worker’s point of view, I still come out ahead. Low-income work is already very unstable.

A: An important ingredient here is labour turnover. There’s a new paper that looks very carefully at what happens to labour turnover rates before and after minimum wage increases, and finds substantial declines in turnover for different kinds of workers.

A different analysis looks at a living wage law that was passed at the San Francisco airport a few years back. They found something like an 80 percent decline in turnover of baggage handlers after the minimum wage went up, the living wage.

People who don’t work in business don’t fully appreciate that turnover is extremely expensive, even for low-wage workers. Filling a vacancy can be 15, up to 20 percent, of the annual cost of that job. The people who have to fill it are managers, using their more expensive time. And meanwhile, you’re losing customers.

So if the minimum wage reduces turnover, which evidence is increasing for, then it can go a long way towards explaining why we see so little employment impact of minimum wage increases. [More]

Q: What happens when cities increase the minimum wage?

A: I have a lot of faith in the democratic process. So when a city focuses on where to set the wage, a lot of people weigh in: business people, workers, unions, community organisations, low-wage workers, local academics.

There’s a city-wide conversation. And I think this is one reason why we consistently don’t see big employment effects: that process usually arrives at some wage that’s a vast improvement over what we currently have and within the realm of what the local economy can afford.

I think we probably consistently err on the side of caution rather than on the side of going too far. [More]

Q: How do you see the 15Now movement, the fast-food workers movement, changing the labour movement?

A: There’s a lot of dynamism behind the fast food and 15 folks and what’s happening in Seattle, a lot of city and state campaigns to increase the minimum wage. They’re putting a focus on wages and wage inequality, and the need to reward people for working hard.

They’re also focusing attention on other issues that are going to be really important in the future: for example, scheduling questions. One of the recurring problems for fast-food and retail workers is not just that their wages are so low, but also that they have little or no control over their schedules.

I think any time you have people agitating for economic and social justice and getting national attention, it’s encouraging for the possibility of turning around three going on four decades of rising economic inequality.

The single most important thing is to keep some oxygen flowing here so that this conversation can continue: the media cover it, people talk about it when they’re having a beer with friends, or when they’re downtown and they see a bunch of McDonald’s workers out making noise. That’s not something we’ve seen a lot of in the last 35 years. [More]

Edited for length and clarity. For full interview, see version on IPS blog. Edited by Kitty Stapp.

Excerpt:

Novice monks beg for alms near the Sule Pagoda in downtown Yangon. The barbed wire barricades behind them were once a permanent feature on this busy road, but have been pushed aside to make way for peace. Credit: Amantha Perera/IPS

By Amantha Perera
YANGON, Nov 21 2014 (IPS)

Myanmar is never out of the news for long. This has been the case since a popular uprising challenged military rule in 1988. For over two decades, the country was featured in mainstream media primarily as one unable to cope with its own internal contradictions, a nation crippled by violence.

Since 2011, with the release of pro-democracy icon Aung San Suu Kyi from house arrest, as well as democratic reforms, the country experienced a makeover in the eyes of the world, no longer a lost cause but one of the bright new hopes in Asia.

U.S. President Barack Obama has visited the country twice since 2011, most recently this month for the 9^th annual East Asia Summit (EAS).

But beneath the veneer of a nation in transition, on the road to a prosperous future, lies a people deep in poverty, struggling to make a living, some even struggling to make it through a single day.

A woman loads bags full of vegetables on to a train carriage in Yangon. Many use the slow-moving passenger trains to transport goods that they will sell in outlying villages, since few can afford road transportation. Credit: Amantha Perera/IPS

Arranging vegetables into small bundles, this vendor tells IPS she wakes up at three a.m. three days a week to collect her produce. She makes roughly three dollars each day. Credit: Amantha Perera/IPS

The commercial capital, Yangon, is in the midst of a construction boom, yet there are clear signs of lopsided and uneven development. By evening, those with cash to burn gather at popular restaurants like the Vista Bar, with its magnificent view of the Shwedagon Pagoda, and order expensive foreign drinks, while a few blocks away men and women count out their meagre earnings from a day of hawking home-cooked meals on the streets.

The former likely earn hundreds of dollars a day, or more; the latter are lucky to scrape together 10 dollars in a week.

A woman waits for passersby to buy bird feed from her in Yangon. The World Bank estimates that over 30 percent of Myanmar’s 53 million people lives below the national poverty line. Credit: Amantha Perera/IPS

A man pushes a cartful of garbage near a busy intersection in Yangon. The 56-billion-dollar economy is growing at a steady clip of 8.5 percent per annum, but the riches are obviously not being shared equally. Credit: Amantha Perera/IPS

The World Bank estimates that the country’s 56.8-billion-dollar economy is growing at a rate of 8.5 percent per year. Natural gas, timber and mining products bring in the bulk of export earnings.

Still, per capita income in this nation of 53 million people stands at 1,105 dollars, the lowest among East Asian economies.

The richest people, who comprise 10 percent of the population, control close to 35 percent of the national economy. The government says poverty hovers at around 26 percent of the population, but that could be a conservative estimate.

According to the World Bank’s country overview for Myanmar, “A detailed analysis – taking into account nonfood items in the consumption basket and spatial price differentials – brings poverty estimates as high as 37.5 percent.”

A man collects his harvest from a vegetable plot that is also a putrid water hole just outside of Yangon. The World Bank estimates that at least 32 percent of all children below five years of age in Myanmar suffer from malnutrition. Credit: Amantha Perera/IPS

Women walk with heavy loads after disembarking from a train. Thousands still rely on the dilapidated public transport system, with its century-old trains and belching buses, because they cannot afford anything else. Credit: Amantha Perera/IPS

The country’s poor spend about 70 percent of their income on food, putting serious pressure on food security levels.

But these are not the only worrying signs. An estimated 32 percent of children below five years of age suffer from malnutrition; more than a third of the nation lacks access to electricity; and the national unemployment rate, especially in rural areas, could be as high as 37 percent according to 2013 findings by a parliamentary committee.

Over half the workforce is engaged in agriculture or related activities, while just seven percent is employed in industries.

Democracy icon Aung San Suu Kyi admits that Mynmar suffers from a long list of woes, but insists that the first step to healing is the return of the rule of law. Credit: Amantha Perera/IPS

Large-scale construction is not unusual in downtown Yangon, where foreign investments and tourist arrivals are pushing up land prices. Officials say they expect around 900,000 visitors this year. Arrivals have shot up by 49 percent since 2011. Credit: Amantha Perera/IPS

Development banks call Myanmar a nation in ‘triple transition’, a nation – in the words of the World Bank – which is moving “from an authoritarian military system to democratic governance, from a centrally directed economy to a market-oriented economy, and from 60 years of conflict to peace in its border areas.”

A man pushes his bicycles laden with scrap in the streets of Yangon. Despite rapid economic growth, disparities seem to be widening, with 10 percent of the population enjoying 35 percent of Myanmar’s wealth. Credit: Amantha Perera/IPS

The biggest challenge it faces in this transition process is the task of easing the woes of its long-suffering majority, who have eked out a living during the country’s darkest days and are now hoping to share in the spoils of its future.

 Edited by Kanya DAlmeida

A minimum wage protest outside a McDonald’s in downtown Seattle. Credit: Peter Costantini/IPS

By Peter Costantini
SEATTLE, Jun 3 2014 (IPS)

“Supersize my salary now!”  The refrain rose over a busy street outside a McDonald’s in downtown Seattle.

A young African-American mother carrying a little girl told the largely youthful crowd that she had walked off the job to join them because “we’re getting tired of being pushed around”. Her five-year-old took the microphone in both hands with a big grin and led a spirited chant: “We’re fired up, can’t take it no more!”

Green signs sported a hashtag, “Strike poverty 5-15-14 #FastFoodGlobal”, red T-shirts reasoned “Because the rent won’t wait – 15 now”, and a blue banner exhorted “15 dollars an hour plus tips. Don’t steal our wages.”

A few hundred ethnically-diverse demonstrators filled a sunny afternoon with demands that fast-food chains pay a living wage. Seattle City Council member Kshama Sawant said that workers in over 150 cities, including her hometown of Mumbai, India, had walked off their jobs that day. 

Fast-food worker Sam Laloo spoke: “I believe in this movement because I’m trying to save enough to go to college and better myself. And I can’t go to college because I don’t make enough money. So it’s a Catch-22.”

According to the organisers, the protest was linked with fast-food worker actions in over 30 countries by coalitions of worker centres, labour unions, community groups and faith organisations.

This prosperous Pacific Northwest seaport, though, is the place in the U.S. closest to actually raising the minimum wage for all workers to something approaching a living wage. From the current Washington state minimum wage of 9.32 dollars an hour — already the highest in the country — Seattle’s mayor, city council, and a majority of citizens according to some polls all support ratcheting up the wage over 60 percent to 15 dollars.

The debate now centres on how long the ramp-up period should be for different-size businesses and non-profits, whether benefits and tips will be included in the wage, and other implementation details.

Seattle would seem a promising test case for these efforts. Home to Boeing, Microsoft and Amazon, the metropolitan area boasts relatively low unemployment and burgeoning technology jobs with good salaries. The electorate votes heavily Democratic and organised labour wields some influence.

Fast food workers protest for higher wages in New York City, July 2013. Credit: Annette Bernhardt/cc by 2.0

Nationally, President Barack Obama has proposed an increase in the federal minimum wage. Democrats introduced legislation in both houses to raise it from the current 7.25 dollars an hour to 10.10 dollars an hour over two years, and index it to inflation thereafter. Recent national polls show strong support for the raise, even among conservatives. But the proposal was filibustered by Senate Republicans, throwing the initiative back to states and localities.

From its establishment in 1938 through 1968, the national minimum wage roughly tracked inflation and productivity.

But sporadic increases since then have failed to keep up with prices, leaving the current inflation-adjusted wage below its 1968 high.

Meanwhile, the standard has fallen far behind productivity growth: had it kept pace, by 2012 it would be nearly three times as high, 21.72 dollars instead of 7.25.

To bypass the federal stalemate, state and local efforts to raise minimum wages have proliferated since the 1990s. Twenty-six of the 50 states have raised or are raising their base wages above the federal level, with increases scheduled in eight states and the District of Columbia.

More than 120 cities have also raised their benchmarks, and efforts are underway in San Francisco, Oakland, Los Angeles, San Diego, Chicago, New York and Portland, Maine.

This resurgent movement to raise the floor of the labour market is surfing the zeitgeist of renewed international debate on economic inequality.

“Capital in the Twenty-First Century”, the chef d’oeuvre of French economist Thomas Piketty, has levitated to number one on the New York Times non-fiction bestseller list. Piketty documents “forces of divergence” in modern capitalism driving current levels of wealth concentration unequalled since the 1920s. To remedy some of the “potentially terrifying” consequences, he proposes a global tax on wealth.

Piketty is no prophet crying in the wilderness. Institutions as influential as the International Monetary Fund (IMF) and the U.S. Federal Reserve Bank have joined the chorus. IMF managing director Christine Lagarde has flagged growing income inequality as a threat to stability, and called for policies to reduce poverty and advance “inclusive” growth. 

Fed chair Janet Yellen has called “a huge rise” in income inequality “one of the most disturbing trends facing the nation”.

Both the IMF and the Organisation for Economic Co-operation and Development have recently recognised that moderate minimum wage raises may be beneficial.

As a non-fiscal policy not requiring direct outlays by cash-strapped governments, minimum wage hikes have proven attractive even to some on the right.

The Economist magazine, a British champion of market hegemony, has swung from opposition to grudging acceptance that measured minimum wage increases can do more good than harm. Another business-friendly voice, the U.S. news service Bloomberg, has editorialised in favour of raising the national minimum.

Conservative British Finance Minister George Osborne recently advocated an increase in the U.K. base wage. And centre-right Chancellor Angela Merkel approved Germany’s first minimum wage legislation in April, setting the benchmark at 8.50 euros (11.75 dollars) in 2015.

As the minimum wage in much of the U.S. falls ever farther behind the economy, labour-market undertows have constrained increasingly older and more-educated workers to take low-wage jobs.

• In 2011, only 12 percent of workers making less than 10 dollars an hour were under 20 years old and only 19.8 percent had not completed high school, a drop of roughly one-half for each measure since 1979.
• The proportion with at least some college increased more than two-thirds to 43.2 percent.

Nevertheless, some politicians and business groups confront each proposed minimum wage increase with a chorus that it will destroy jobs. Historically, though, the predicted damage has yet to materialise.

After decades of experience, rigorously empirical studies have consistently found no significant effects on employment due to minimum wage increases at national, state or local levels.

Increased costs to businesses have been absorbed mainly through very small price increases. Other means of reducing costs have included increased productivity through lower turnover and absenteeism, better organisational efficiency, compression of the wage scale, and sometimes slightly reduced average hours.

These trends held even for Santa Fe, New Mexico, after its 65 percent minimum wage hike in 2004, the biggest local raise. There, increased expenses against revenues averaged around one percent for all affected businesses. The restaurant and hotel industries, which use more low-wage labour, had average cost increases of three to four percent. To cover these, a 10-dollar meal would have had to rise to 10.35.

In any case, the pertinent question is not whether any jobs are lost: it is whether affected workers end up better off after the increase.

Unlike the high-school-to-Social-Security factory jobs of a half-century ago, today’s low-wage service jobs are notoriously volatile. Involuntary and voluntary turnover is often high, and weekly hours also frequently fluctuate. From a worker’s point of view, a “lost job” usually translates into days or weeks until the next job, not a life-changing loss.

After previous minimum wage increases, even if total hours worked yearly were reduced slightly for some workers, the size of the hourly raise would nearly always ensure that their total yearly income would be higher than before the increase.

Back at the Seattle rally, council member Sawant preached to the choir: “Because of our courage, our solidarity with each other, not because of the powers that be, we have brought things to this point where 15 can become a reality in Seattle and inspire the whole nation and the whole world.”

Excerpt:

Fast food workers protest for higher wages in New York City, July 2013. Credit: Annette Bernhardt/cc by 2.0

By Jim Lobe
WASHINGTON, Apr 16 2014 (IPS)

In new data certain to fuel the growing public debate over economic inequality, a survey released Tuesday by the biggest U.S. trade-union federation found that the CEOs of top U.S. corporations were paid 331 times more money than the average U.S. worker in 2013.

According to the AFL-CIO’s 2014 Executive PayWatch database, U.S. CEOs of 350 companies made an average of 11.7 million dollars last year compared to the average worker who earned 35,293 dollars.Of all Western countries, income inequality is greatest in the United States, according to a variety of measures.

The same CEOs averaged an income 774 times greater than U.S. workers who earned the federal hourly minimum wage of 7.25 dollars in 2013, or just over 15,000 dollars a year, according to the database.

A separate survey of the top 100 U.S. corporations released by the New York Times Sunday found that the media compensation of CEOs of those companies last year was yet higher — 13.9 million dollars.

That survey, the Equilar 100 CEO Pay Study, found that those CEOs took home a combined 1.5 billion dollars in 2013, slightly higher than their haul the previous year. As in past years, the biggest earner was Lawrence Ellison, CEO of Oracle, who landed 78.4 million dollars in a combination of cash, stocks, and options.

The two surveys, both released as tens of millions of people filed their annual tax returns, are certain to add to the growing public debate about rising income and wealth inequality.

It is a theme that came to the fore during the 2011 Occupy Wall Street movement and that President Barack Obama has described as the “defining challenge of our time” as the 2014 mid-term election campaign gets underway. He has sought to address it by, among other measures, seeking an increase the minimum wage, extending unemployment benefits, and expanding overtime pay for federal workers.

Obama’s focus on inequality — and the dangers it poses — has gained some important intellectual and even theological backing in recent months.

In a major revision of its traditional neo-liberal orthodoxy, the International Monetary Fund (IMF) last month released a study raising the alarm about the impact of negative impacts of inequality on both economic growth and political stability, with IMF Managing Director Christine Lagarde warning that it created “an economy of exclusion, and a wasteland of discarded potential” and threatens “the precious fabric that holds our society together.”

Pope Francis has also spoken repeatedly – including in a private meeting with Obama at the Vatican last month – about the dangers posed by economic inequality, while the World Economic Forum’s Global Risks Report, published in January, identified severe income disparity as the biggest risk to global stability over the next decade.

Meanwhile, an epic new study by French economist Thomas Piketty, ‘Capital in the Twenty-First Century,’ that compares today’s levels of inequality to those of the Gilded Age of the late 19^th century, is gaining favourable reviews in virtually every mainstream publication.

Piketty, whose work is based on data from dozens of Western countries dating back two centuries and argues that radical redistribution measures, including a “global tax on capital,” are needed to reverse current trends toward greater inequality, is speaking to standing-room-only audiences in think tanks here this week.

In addition, the Supreme Court’s ruling earlier this month lifting the aggregate limits that wealthy individuals can contribute to political campaigns and parties has added to fears that, in the words of a number of civic organisations, the U.S. political system is moving increasingly towards a “plutocracy”.

Of all Western countries, income inequality is greatest in the United States, according to a variety of measures. In his book, Pikkety shows that inequality of both wealth and income in the U.S. exceeds that of Europe in 1900.

The 331:1 ratio between the income of the 350 corporate CEOs in the Pay Watch survey and average workers is generally consistent with the pay gap that has prevailed over the past decade.

That ratio contrasts dramatically with the average that prevailed after World War II. In 1950, for example, the differential between the top corporate earners and the average workers was only around 20:1. As recently as 1980 – just before the Reagan administration began implementing its “magic of the marketplace” economic policies – the ratio had climbed only to 42:1, according to Sarah Anderson, a veteran compensation watcher at the Institute for Policy Studies here.

“I don’t think that anyone, except maybe Larry Ellison, would claim that today’s managers are somehow an evolved form of homo sapiens compared to their predecessors 30 or 60 years ago,” said Bart Naylor, Financial Policy Advocate at Public Citizen, a civic accountability group.

“Those who built the pharmaceutical industry and the hi-tech industry …were fine senior executives, and they didn’t drain the economy the way today’s senior executives insist on doing,” he told IPS. “The machinery of awarding senior executive pay is clearly broken.”

What is particularly galling to unions and their allies is that many top companies argue that they can’t afford to raise wages at the same time that they are earning higher profits per employee than they did five years ago. While the average worker earned 35,293 dollars last year, the S&P’s 500 Index companies earned an average of 41,249 dollars in profits per employee – a 38 percent increase.

“Pay Watch calls attention to the insane level of compensation for CEOs, while the workers who create those corporate profits struggle for enough money to take care of the basics,” said AFL-CIO President Richard Trumka.

“Consider that the retirement benefits of the CEO of Yum Brands, which owns KFC, Taco Bell, and Pizza Hut, has benefits of over 232 million dollars in his company retirement fund, all of which is tax deferred,” said Anderson. “It’s quite obscene when you know it’s a corporation that relies on very low-paid labour.”

Congress is currently considering several measures to address the issue, although most of them are opposed by Republicans who enjoy a majority in the House of Representatives.

Nonetheless, a tax package introduced by the Republican chairman of the powerful House Ways and Means Committee would close one large loophole that permits CEOs to deduct so-called “performance pay” – what they earn when they achieve certain benchmarks set by their board of directors – from their taxes.

“It’s pretty outrageous when the CEOs of some of the biggest companies of the National Restaurant Association are essentially getting heavily subsidised when so many of their workers are relying on public assistance and fighting for an increase in the minimum wage,” Anderson told IPS.

In addition, the Securities and Exchange Commission (SEC) is expected to formally adopt a long-pending rule that would require publicly held corporations to disclose how the pay received by their CEO compares to that of their employees, including full-times, part-time, temporary, seasonal and non-U.S. staff.

Kigali, Rwanda’s capital, is described as one of the safest and cleanest cities in Africa as the government tries attract further investment and tourism. Credit: Aimable Twahirwa/IPS

By Aimable Twahirwa
KIGALI, Mar 28 2014 (IPS)

It’s almost 20 years now since Sylidio Gashirabake, a Hutu, was a perpetrator in Rwanda’s genocide. It’s also almost 20 years since his neighbour, Augustin Kabogo, a Tutsi, lost his sister and family in the violence. But today, both men work side-by-side in their joint business venture in Kirehe district in southeastern Rwanda.

It is estimated that 800,000 minority Tutsis and moderate Hutus lost their lives in the massacre that began following the death of former President Juvenal Habyarimana, and his Burundian counterpart Cyprien Ntaryamira, when their plane was shot down over Kigali on Apr. 6, 1994.“Rwanda has a clear business environment which is providing incentives and facilities that is making our job easy to cover other neighbouring countries." -- Atul Ajela, the general manager of mattress manufacturer Dodoma

Gashirabake was released from prison in 2006 after confessing two years earlier to his crimes and revealing to Kabogo — who managed to escape the killing by hiding in a neighbouring marshland — where the remains of his family where. Though Gashirabake has always denied having any part in the death of Kabogo’s family.

“I have deliberately [confessed] so to ease my conscience from this burden, which I am unable to continue bearing after several years,” Gashirabake told IPS.

Two years ago, Kabogo forgave Gashirabake and the neighbours have been business partners ever since.

They are part of a group of 30 people involved in a swine breeding project in Kirehe district that was founded by a Japanese volunteer in 2012 and aims to reconcile victims and perpetrators of Rwanda’s genocide.

And both Gashirabake and Kabogo are convinced that in order for them to be successful, it is imperative that reconciliation in Rwanda becomes a reality. Right now, they earn around 200 dollars per month on average from the business.

Kabogo is convinced that it is no longer important whether Gashirabake killed his family or not. What is important, he says, is that Gashirabake has apologised for the crimes he committed.

“I must agree that reconciliation through poverty reduction is slowly becoming a reality 20 years after [the genocide] in Rwanda,” Kabogo told IPS.

Across the 30 districts of this central African nation there are several projects, supported by both the government and NGOs, which focus on reducing poverty.

This includes the government-funded Girinka (“May you have a cow” ) project. Founded in 2006, Girinka distributes cows to vulnerable families in remote rural areas. The project states that as of 2013, about 350,000 people have benefitted from the programme.

Because almost 90 percent of the population relying on the agriculture sector for their survival, the government has adopted a number of reforms to ensure that poor households and genocide survivors are supported.

This includes the establishment of the Government Assistance Fund for Genocide Survivors which, since its creation in 1998, has had a total budget of 117 million dollars to provide education, healthcare packages and housing for vulnerable genocide survivors.

Since it took power after defeating the genocidaire regime in July 1994, the former rebel group and current ruling Rwanda Patriotic Front (RPF) has embraced major reforms, including sound economic ones.

In a World Bank report entitled “Rwanda: Rebuilding an Equitable Society – Poverty Reduction After the Genocide” showed that approximately 70 percent of the country’s 11.5 million people lived below the poverty line in 1993. Four years later, this was reduced to 53 percent.

Latest figures published in the government’s third Integrated Household Living Conditions Survey 2011 show that between 2006 and 2011 a further one million people were lifted out of poverty.

And Rwanda has been lauded by its development partners, the World Bank, European Union, and the International Monetary Fund, for these economic achievements and successful reforms.

Commercial Street avenue in Kigali’s city centre, Rwanda. New buildings are sprouting across the capital city’s skyline 20 years after the genocide. Credit: Aimable Twahirwa/IPS

However, there is an emerging consensus that challenges to the country’s economic growth and development remain.

Pascal Nshizirungu, a lecturer in socio-economic sciences at Kigali University, told IPS that national efforts to mobilise investment should also go hand-in-hand with closing the gap between rich and poor.

The government, through the second phase of its Economic Development and Poverty Reduction Strategy, is investing in key development areas in order to have Rwanda reclassified as a middle income country by 2020, with a per capita income of 1,240 dollars. Currently the per capita income of Rwanda’s middle class is estimated to be 693 dollars.

The government has also been targeting foreign investment and creating incentives for investors, such as privatisation.

“Apart from political stability, the country has now an asset which other countries in the region don’t have such as infrastructure, which is attracting much more private investments,” Robert Mathu, executive director of the Rwanda’s Capital Market Authority, a government regulatory body for all stock market operations, told IPS.

“The country is looking to boost national growth and create a climate that encourages the involvement of the private sector,” Mathu said.

Rwanda’s economic growth was 4.6 percent in 2013.

“We believe that by having strong partners in the private sector, we will reduce poverty and agriculture…also it can contribute to the economic growth at the same time,” Rwandan Minister of Finance and Economic Planning Claver Gatete told IPS.

Atul Ajela, the general manager of Dodoma, a new mattress manufacturer that invested in Rwanda two years ago, believes that 20 years after the genocide, Rwanda is now a safe, and the best, place to start a business.

“Rwanda has a clear business environment which is providing incentives and facilities that is making our job easy to cover other neighbouring countries,” Ajela told IPS.

Remains of some of the over 800,000 victims of Rwanda’s genocide. Credit: Edwin Musoni/IPS

Moral Monday, the populist movement in North Carolina that saw a diverse coalition of thousands of progressive activists descend upon the state legislature, is now spreading throughout the U.S. South.

“I think it’s a sign the body politic is healthy in the U.S. One of the cheap benefits of U.S. citizenship is the right to petition your government and protest unjust laws. I think it’s a sign of health, I expect that it will spread,” Janice Mathis, vice president of the Citizenship Education Fund, told IPS.

Protesters attempt to deliver a letter to Gov. Nathan Deal on Jan. 28 that explains the consequences of not expanding Medicaid, a social healthcare programme for low-income people, in the state of Georgia. Credit: Courtesy of Gloria Tatum, Atlanta Progressive News

Moral Monday was first formed in North Carolina in April 2013. More than 800 people have been arrested in Moral Monday protests that have involved entering the State Capitol. Weekly attendance in North Carolina has been estimated at around 2,500 people.

North Carolina’s Moral Mondays have focused on opposing Republican redistricting and other voting changes, cuts to public education and social programmes, proposed changes that would increase the sales tax, challenges to abortion rights, and other issues.

So far this year, Moral Monday protests have started in Georgia, and “Truthful Tuesday” protests have been formed in South Carolina.

In Georgia’s second Moral Monday protest on Jan. 28, 10 activists were arrested for demanding to speak to the Republican governor, Nathan Deal, about expanding Medicaid in Georgia.

When Gov. Deal did not show up to receive the letter, the 10 quietly sat and waited for him. After 5pm, the Capitol police came in and informed the group that if they did not leave, they would be arrested. They refused to leave without giving the letter to the governor. Credit: Courtesy of Gloria Tatum, Atlanta Progressive News

Under the Affordable Care Act, commonly known as “Obamacare,” the federal government has offered billions of dollars to U.S. states to expand Medicaid to a larger category of low-income families.

However, in 2012, the Supreme Court ruled that the states do not have to accept this money and the federal government cannot punish them for it by withholding other funds.

About half of U.S. states, mostly under Republican governors, have refused to accept the funding. As a result, millions of U.S. citizens are going without access to non-emergency health care, and thousands of deaths each year can be attributed to this lack of health care, according to the Georgia Budget and Policy Institute.

Many of the states that have refused to accept federal Medicaid dollars are in the U.S. South.

“I think it’s very encouraging 10 people were arrested this Monday,” Mathis said. “We’re at a crossroads I think in the U.S. Shall we go forward as one nation committed to a basic standard of living as an American, or are we content with the worst income disparity in our history?

The police then handcuffed and arrested Democratic State Senator Vincent Fort, Reverend Alan Jenkins, Kevin Moran, Kathy Acker, Megan Harrison, Brittany Gray, Marguerite S. Casey, Karen Reagle, Michael Sehumm, and Daniel Hanley. Credit: Courtesy of Gloria Tatum, Atlanta Progressive News

A 2011 study by the Congressional Budget Office found that the top earning one percent of households increased their income by about 275 percent after federal taxes and income transfers between 1979 and 2007, compared to a gain of just under 40 percent for the 60 percent in the middle of the country’s income distribution.

Overall, in 2012, the gap between the richest one percent and the remaining 99 percent was the widest it’s been since the 1920s, with the incomes of the top one percent rising nearly 20 percent compared with a one percent increase for the remaining 99 percent.

“It’s nice to see a movement birthed in the South,” Mathis said. “Southern states still have peculiar ways of viewing issues that is unique. It is no coincidence voter ID, [lack of] Medicaid expansion, overincarceration were ground zero in the Southern states.”

Repressive policies have “spread to Pennsylvania and Wisconsin and that’s unfortunate, but it has its roots in the South,” she said.

Meanwhile, in South Carolina, Truthful Tuesday activists held their first rally at the State Capitol there, and are hoping to begin weekly rallies soon.

“We did a rally that opened the session, Tuesday the 14th [of January], something that’s hard to pull off: middle-of-the-week, workday and it was raining. We had a thousand people,” Burt Bursey, executive director of the South Carolina Progressive Network, told IPS.

“Since then, we’ve had some meetings. We’re going back to the governor’s office Tuesday the 4th [of February],” he said.

As for why there is better turnout at the South Carolina rallies than in Atlanta, Georgia, he said, “it’s easier to organise in a small, backward state.”

One of the benefits of having protests on the same day every week is that everyone always knows when the next protest is.

Another benefit is that rather than protesting on days when the legislature is about to vote on a bill, which allows the legislature to set the pace, “We’re going to set the agenda here,” Bursey said.

Mathis said she is not worried about the smaller turnout in Atlanta thus far, because North Carolina’s Moral Monday started out small as well.

“We’re also at the beginning. We’ve got to continue to grow and expand it, bring in other groups, to expand it beyond the sort of usual suspects. It needs to expand beyond the activist core. It also needs to expand geographically, to all of Georgia’s 159 counties,” she said.

A strike by fast-food workers for higher wages in New York City's Union Square in August 2013. Credit: The All-Nite Images/ CC by 2.0

By Ramy Srour
WASHINGTON, Dec 11 2013 (IPS)

In the midst of a nationwide movement for policymakers to raise minimum wages for millions of workers in the United States, experts here continue to debate the advantages and drawbacks of raising the federal rate.

The push for higher minimum wages has gained momentum in recent weeks, particularly with strikes by low-wage restaurant workers last Thursday in more than 100 cities. President Barack Obama also joined the debate, delivering a landmark speech condemning income inequality and the “race to the bottom” where businesses try to “pay the lowest wages” possible.

Obama’s renewed call coincided with a letter by 53 members of Congress calling on McDonald’s and other employers in the fast-food sector to raise pay for their employees. “Put[ting] more money in the hands of consumers…can help strengthen our economy,” the lawmakers noted.

But while higher minimum wages are widely believed to have a positive effect on social conditions, particularly by easing poverty among the most vulnerable sectors of society, economists maintain varying views on the issue.

“We’re all looking for ways to help low-income people get ahead, and that’s a very important goal,” Jonathan Meer, an assistant professor at Texas A&M University and an expert on economic public policy, told IPS. “But the real question is, what’s the right way to do it?”"Raising minimum wages is not going to reverse inequality, but it does help [in] mitigating it."
-- Sylvia Allegretto

So far, he said, most people have proposed minimum wage increases because “it’s the easy fall-back to say, ‘Let’s just pay people more.’ But research shows that increasing minimum wages actually reduces job growth. Simply put: people never get hired.”

This is a phenomenon economists call “disemployment” or “job loss” – that is, when employers don’t lay off workers but simply stop hiring new ones while decreasing the hours of those who are already employed. Opponents of raising the minimum wage say doing so leads to an overall lower level of employed individuals and slower job growth.

Gathering momentum

In his speech, Obama stressed that “inequality…hurts us all,” especially when “middle-class families can no longer afford to buy the goods and services that businesses are selling.” In the United States, he continued, “success has never been about survival of the fittest [but one] where we’re all better off.”

Despite strong opposition from many sectors of American society, including businesses and policymakers, some states have already started moving toward the president’s vision.

According to the most recent statistics from the U.S. Department of Labour, 19 states plus the District of Columbia have a minimum wage that is higher than the federally mandated threshold of 7.25 dollars per hour. Washington state leads the country at 9.19 dollars per hour, while several others have proposals to raise some of these rates even higher.

Others have recently raised their minimum wage, including California, Connecticut, New Jersey and New York. But experts say it is too early to establish whether these moves have had a sizable positive impact on low-income workers, and those who subscribe to the view that higher minimum wages could increase unemployment have used statistical evidence to prove their point.

But Meer said this view may be too simplistic and that it ignores the larger trends that often hide behind the numbers.

When trying to understand the relationship between minimum wage and employment, he said policymakers need to look at “the rate of job creation and job disruption.” When employers stop expanding their workforce, you get to job disruption, which is when employers stop hiring new workers because of the higher costs associated with their wages.

It is a larger trend that “goes beyond simple numbers, with more and more people living on government subsidies,” Meer said. And it is usually very “difficult to see in the conventional data.”

Meanwhile, other economists consider the link between minimum wages and employment levels to be weak, and claims of higher wages leading to job loss simply “scare tactics”. What is really at stake, they say, are the poorest sections of society.

“The biggest problem is that low-wage workers are falling further and further behind, and there’s a need to pull [them] up above the poverty line,” Sylvia Allegretto, the co-chair of the Centre on Wage and Employment Dynamics at the University of California, Berkeley, and a research associate at the Economic Policy Institute here, told IPS.

Minimum wages, then, become more than simply a way to increase or decrease unemployment and instead are about inequality itself.

Inequality vs. employment

In the United States, recent figures suggest that the wealthiest 10 percent of the population earn an average yearly income of over a million dollars, while the remaining 90 percent brings in just over 30,000 dollars. One tenth of the population controls two-thirds of the country’s economic wealth.

“Raising minimum wages is not going to reverse inequality,” Allegretto warned. “But it does help [in] mitigating it.”

She noted that a raising wage is likely to have very few negative effects, and would most likely benefit those at the very bottom of the wage scale. At the same time, the Berkeley economist recognised that there may be some disemployment risks, though she says these are largely negligible.

“Even granting that there may be some small disemployment effects to higher wages, the benefits far outweigh the costs,” she said.

Workers that keep their jobs end up having a higher income and are better off even if their hours are cut, she continued, because “higher wages help mitigate the fewer hours.”

But even if workers manage to mitigate the effects of fewer hours, critics of minimum wage laws note that the real problem is with those who fail to get hired. The divergence in the debate seems to hinge on the purpose of a minimum wage. For some, it’s about mitigating inequality. For others, it’s a matter of avoiding unemployment.

Twelve-year-old Maruf lives in a shanty in Nayanagar, close to a Dhaka suburb. He works at a nearby car workshop, fixing luxury car engines for about six dollars a month. He shares this meagre income with his family of four. Credit: Naimul Haq/IPS

By Ramy Srour
WASHINGTON, Nov 20 2013 (IPS)

Growing income inequality will pose a major threat to social stability in countries around the globe, according to a new report by the World Economic Forum.

Based on a worldwide survey of experts from academia, government and the non-profit sector, the report finds that income inequality is the second most important trend in the top 10 that are likely to impact social stability over the next year.“People see that there is that one percent of the population that is at the very top of the system and keeps on accumulating wealth." -- Christian Meyer

It cites rising tensions in the Middle East and persistent structural unemployment as other major global threats.

But while the findings are primarily geared toward highlighting income inequality within countries, experts suggest that there is also a global picture that needs emphasis, one where national borders are less of a factor.

“Looking at income inequality within a given country makes perfect sense, because government policies will affect the way people live there,” Christian Meyer, a research associate at the Centre for Global Development (CGD), a think tank here, told IPS.

“But there’s also an international perspective, one that goes beyond the national level, where if we take people and compare their income levels, without thinking about national borders, we will find that income inequality is incredibly high, much higher.”

The report is based on responses offered by the nearly 1,600 experts that make up the Network of Global Agenda Councils (NGAC), a global community of over 80 councils representing “thought leaders” around the world. The World Economic Forum describes itself as an independent international organisation that gathers world leaders from business, academia and the non-profit sector to try to shape the global social and economic agenda. Its members come primarily from companies and industries from the developed world. 

“Widening wealth disparity affects every part of our lives,” the report notes. “It’s impacting social stability within countries and threatening security on a global scale, and looking ahead to 2014, it’s essential that we devise innovative solutions to the causes and consequences of a world becoming ever more unequal.”

According to this new body of research, growing income inequality has become a major threat in both the developing and developed world, including North America, where the survey reveals that income inequality is the number one challenge.

The “incredible wealth created over the last decade in the [United States] has gone to a smaller and smaller portion of the population,” the report warns, “and the disparity stems from many of the same roots as in developing countries.”

According to the WEF survey, nearly two-thirds of U.S. citizens think that the current economic system favours the wealthy. But in some European countries, where people are still recovering from the global economic crisis that has left thousands of people out of work, the percentage is much higher.

Elite capture

As the gap between rich and poor widens according to both national and international metrics, analysts worry that people will be more likely to take the streets to voice their frustrations with a system that paves the way for the privileged few. This scenario, the report notes, is likely to lead to greater social instability and may threaten global security.

“Unrest cloaked in a desire to change from one political leader to another is a manifestation of people’s concerns about their basic needs,” the report notes. It also stresses that it is usually the young who are most willing to do so, as they feel “they have nothing else to lose.”

“People see that there is that one percent of the population that is at the very top of the system and keeps on accumulating wealth,” the CGD’s Meyer says. “So they realise that there must be something wrong going on at the top, that this is a form of ‘elite capture’.”

Indeed, the perception of elite capture, or the lack of social mobility, is what seems to be at the root of much of this widespread disaffection.

“The problem with this concentration of income is that it self-perpetuates from one generation to the other through a series of mechanisms, such as good education, but also through the access to good networks,” Ricardo Fuentes, head of research at Oxfam Great Britain, a humanitarian group, told IPS.

“This self-perpetuation means that the whole idea of equality of opportunity and that ‘all men are created equal’ is seriously undermined.”

This phenomenon, Fuentes notes, has led to people increasingly believing that personal effort and merit will not bring them anywhere, and that their government will only listen to the voices of the rich.

“Even in countries where governments are elected democratically,” he says, “we are increasingly seeing that the rich use their money to influence the government and the media through lobbies and other mechanisms that make them particularly influential.”

Reversing the trend

The report’s release comes as the NGAC’s leaders are gathered in Abu Dhabi Nov. 18-20 for the 2013 Summit on the Global Agenda, where they plan to discuss the topics that will be part of the yearly summit the WEF will hold in Davos, Switzerland, in January.

At the summit’s opening, WEF founder and chairman Klaus Schwab noted that the “biggest challenge we have today is the incapability of the system of global governance to take the necessary time and devote the necessary attention to construct our future.”

As leaders seek to come up with solutions to income inequality, some suggest that the recent growth witnessed by some Latin American countries may be one way to tackle the issue elsewhere.

“We know from history that having a more equal society is not a utopian objective,” Fuentes says. “Up until the 1980s, there was more investment in public education, a conscious effort by the state to strengthen safety nets, and a growing standard of living for workers.”

More countries, particularly in Latin America, are taking fiscal measures that reflect these policies, he says, at least according to certain indicators. “And now, they have actually started to reverse inequality.”

Like many Chileans, Alejandro, who owns a small supermarket, hopes the next government will curb social inequality. Credit: Marianela Jarroud/IPS

By Marianela Jarroud
SANTIAGO, Nov 15 2013 (IPS)

Voters fed up with the extremely unequal distribution of wealth and power in Chile are expected once again to elect a centre-left government Sunday.
According to the latest poll by the Centro de Estudios Públicos (CEP), a local think tank, former socialist president Michelle Bachelet (2006-2010) is set to win outright in the first round of voting, with an at-least 30 percent lead over Evelyn Matthei, the candidate for the governing right-wing alliance.

Bachelet needs 50 percent plus one vote to avoid a run-off – which only occurred once, in 1993, since democracy was restored after the 1973-1990 dictatorship of General Augusto Pinochet.

But CEP also projected a low turnout, as did the Latinobarómetro Report 2013, which found that Chileans were highly critical of the system because the economic prosperity of the last 20 years has only been enjoyed by a minority of the population.

According to the World Bank, per capita income in Chile is 21,500 dollars a year.

But in this South American country of 17 million, two out of three households have incomes of less than 1,200 dollars a month and are heavily in debt, according to the Fundación Sol, a non-profit organisation that focuses on labour and social issues.

And over half of all workers earn less than 500 dollars a month.

By contrast, the wealthiest 4,500 families have an average monthly income of over 40,000 dollars.

Poverty is measured by the “national socioeconomic survey”, which estimated the poverty rate at 14.5 percent of the population in its latest edition, in 2011.

But to gauge poverty, Chile only takes into account the monetary aspect. A person is categorised as poor if they earn less than 144 dollars a month in urban areas or less than 100 dollars a month in rural areas.

This cut-off line is based on the cost of the basic basket of foods – which was constructed in 1987 with products that Chileans no longer even consume, such as cooking oil sold in bulk.

Experts agree that if the methodology for estimating poverty were updated, the rate could climb as high as 28 percent.

That explains the roots of the discontent that has fuelled a wave of protests and demonstrations since 2011 and threatens to pose a major challenge to the government that takes office in March 2014, if the profound changes demanded by Chileans are not forthcoming.

Economist Gonzalo Durán at Fundación Sol told IPS that “many indicators depict the country in a very positive light,” but that access to the trappings of development was limited.

He stressed that inequality is so marked that the richest five percent of the population have incomes 270 times those of the poorest five percent.

And he said that gap doubled between 1990 and 2011, which meant that “according to this indicator, inequality in Chile has increased 100 percent in the last 20 years.”

Durán cited a University of Chile study which shows that the wealthiest one percent accounts for 30 percent of all income – compared to just under 22 percent in the United States, for example.

Sociologist Alberto Mayol told IPS that “poverty is definitely a very urgent issue. But inequality is not the same thing as poverty, and in Chile it has never been addressed by public policies.”

In societies in general, he said, a not insignificant portion of the population tends to be left out of benefits and bears the brunt of the policies dictated by the country’s social model.

“That proportion is generally around 30 percent. But in Chile, for example, 60 percent of workers suffer from precarious employment.”

Chileans, who are generally not familiar with these hard-hitting statistics, live with them nonetheless day to day. Many people in this country cannot afford a decent diet, and millions rack up credit card debt just to buy their groceries.

Alejandro, 62, and Juanita, 56, a couple who worked hard to have their own small supermarket on the south side of Santiago, hope the next government will finally address the needs of people like them.

At great sacrifice, they managed to send their two children to university. Their daughter still lives at home, and they give their son help when he needs it. “Both of them went to the university, thanks to our blood, sweat and tears,” Alejandro says with emotion.

“I don’t care who governs; work is my government,” he adds, before stating that “people have to take to the streets to protest because being able to do that is one of the important things about democracy, and because there are many reasons to do so.”

His wife, however, says it is very important that the right does not govern, because when it does, “the rich continue to call the shots, and the middle and lower classes continue to sink further and further.”

Mayol said Chile is reaching Sunday’s elections “at a time of acute protests challenging the fundamental values and cultural conditions of this model of society.”

The election of multimillionaire business tycoon Sebastián Piñera as president in 2010 “was the cultural triumph of profit as a form of social relations, as a political mechanism.” But as the right-wing president’s four-year term is coming to an end, “profit is akin to Satan in Chile,” he said.

The analyst said “the economic, political and institutional model is suffering a crisis of legitimacy, and in politics, legitimacy is like motor oil – it prevents friction.”

Once Bachelet wins the elections, he said, she will have to defend her new coalition, Nueva Mayoría (New Majority), which represents “a confluence with the social movements of the old Concertación,” the centre-left coalition that governed the country from 1990 to 2010.

To do that, he said, she will have to govern together with representatives of social movements, like two former student leaders – Camila Vallejo of the Communist Party, and Giorgio Jackson, an independent – both of whom have a strong chance of being elected to Congress.

On Sunday, voters will also elect the 120 members of the lower house, and 20 of the 38 members of the Senate. In addition, regional advisers, who will act as liaisons between the citizens and the government, will also be elected for the first time.

Bachelet will have to live up to her main campaign pledges: tuition-free higher education for all within the next six years; a tax reform making it possible to finance this; and the most strongly-voiced demand – a reform of the constitution left in place by former dictator Pinochet, which is still in force.

A lack of education and training condemn many street children in Bangladesh (and many other countries) to a life of poverty. Few are able to escape the cycle of low wages for unskilled work. Credit: Naimul Haq/IPS

By Thalif Deen
UNITED NATIONS, Oct 16 2013 (IPS)

With the richest one percent of the population now owning 40 percent of global assets, and the bottom half sharing just one percent, inequality is fast being recognised as a stubborn underlying obstacle to development.

In recent decades, despite steady economic growth, inequality has risen in most countries and in nearly every region of the world. It takes various forms, from income gaps to unequal political access. And it originates in a variety of factors, such as gender, ethnicity, disability, legal status, caste, skin colour, language and economic status.

Yoke Ling Chee of the Penang-based Third World Network (TWN) told IPS that the problem is worsening not only within the richest industrialised countries that are members of the Organisation for Economic Cooperation and Development (OECD), but also some developing countries with rapid economic growth.

Continuing structural inequities and flaws in the global trade and financial systems are a major cause, she said.

“The highly inadequate regulatory [and] policy responses to the last rounds of financial crises means that systemic weaknesses continue which make countries vulnerable to more financial instability,” she said.

Chee also said developing countries that have put in place financial reforms but are export-dependent found themselves equally vulnerable in the 2008 crisis and workers in export sectors suffered as a result.

According to a statement in May by a group of 17 U.N. human rights experts, inequality often triggers social problems that further marginalise groups already left behind and neglected, while unequal access to wealth allows runaway resource use by the wealthy, leading to environmental degradation and climate change, whose impacts fall disproportionately on the most vulnerable.

The group of U.N. experts pointed out that the rise in inequality has severely undermined the hard-won achievements of the Millennium Development Goals (MDGs). It called for a post-2015 economic agenda that will include both a stand-alone and cross-cutting goals to eliminate inequalities.

An Open Working Group (OPW) of U.N. member states is scheduled to meet May 22-24, 2014 to discuss the contours of the proposed new set of Sustainable Development Goals (SDGS) which will succeed the current MDGs, whose target date is 2015.

The experts say making equality a cross‑cutting priority would mean every new goal will confront head-on the systemic injustices that drive inequalities – from institutional discrimination against minority groups to uneven investments in social services in different regions of a country.

They singled out social protection as “an indispensable part of the policy toolkit for tackling inequalities, to ensure that the post‑2015 agenda leaves no group, community or region behind.”

As many as 80 percent of families today have no access to social protection, despite clear evidence that social protection systems can contribute significantly to reducing poverty, creating social cohesion, realising human rights and protecting people from shocks such as food price spikes, the experts say.

They also say the post‑2015 agenda should be linked to the International Labour Organisation’s (ILO) recommendation on social protection floors, which will help create a funding mechanism for developing countries.

The group includes Verene Sheperd, Working Group of Experts on People of African Descent; Alfred de Zayas, independent expert on the promotion of a democratic and equitable international order; Magdalena Sepulveda, Special Rapporteur on extreme poverty and human rights; and Olivier De Schutter, Special Rapporteur on the right to food.

In an op-ed in the New York Times early this week, Joseph Stiglitz, the 2001 Nobel Prize winning economist, said it is well-known by now that income and wealth inequality in most rich countries, especially the United States, have soared in recent decades and, tragically, worsened even more since the Great Recession.

But what about the rest of the world? he asked. Is the gap between countries narrowing, as rising economic powers like China and India have lifted hundreds of millions of people from poverty? And within poor and middle-income countries, is inequality getting worse or better?

Roberto Bissio, director of Social Watch, told IPS the World Bank has also claimed that Goal One of the MDGs – reducing by half the proportion of people in extreme poverty – was met in 2010, five years in advance of the 2015 deadline. Yet that optimistic statistical conclusion in fact hides much more complex realities, he said.

Between 1990 (which is the starting date of Goal One) and 2010 total world exports multiplied almost five times, growing from a total value of 781 billion dollars in 1990 to 3.7 trillion dollars in 2010.

Over the same period, the world’s average inhabitant more than doubled his or her income: from 4,080 dollars a year in 1990 to 9,120 dollars in 2010. Yet that growth in trade and wealth is not reflected with a similar momentum in the evolution of social indicators.

TWN’s Chee told IPS a significant degree of investment profits and value‑added continue to be taken out of developing countries. Those countries that are food commodities exporters now face speculation as an added vulnerability.

Countries that depend on mining controlled by transnational corporations (TNCs) are characterised by environmental destruction, social problems and regressive tax structures for those industries.

“All these contribute to inequalities,” she argued.

“The austerity policies that many European governments now impose on their society that impact on the lower income, even the middle income, are a repeat of what developing countries have been suffering under conditionalities imposed by the International Monetary Fund (IMF) for decades,” Chee said.

According to the government’s definition, many people living in favelas or shantytowns in Brazil are “middle-class”. Credit: Fabíola Ortiz/IPS

By Jim Yong Kim
WASHINGTON, Jul 2 2013 (IPS)

Latin America has had a good decade. Over the last 10 years, economic growth averaged 4.2 percent, and 70 million people escaped poverty. Macroeconomic stability, open trade policies and pro-business investment climates have supported and will continue to support strong growth in the years to come.

Crucially, economic gains are being broadly shared. A recent World Bank report found that the middle class in Latin America grew by 50 million people between 2003 and 2009, an increase of 50 percent. For a region long driven by wealth inequality, this is a remarkable achievement.

I see a region that has come a long way from the “lost decade” of the 1980s and is emerging as a driver of global growth. But we have much more to do to ensure that Latin America’s people share in their region’s growing prosperity.

Although inequality is declining, Latin America remains the world’s most unequal region. From 2008 to 2010, Latin America was home to eight out of 10 countries with the world’s highest rates of income inequality, as measured by the Gini coefficient.

Intergenerational mobility also remains limited: a young person’s parents’ economic and social background, as well as whether they were born in a rural or urban area, still largely determines that person’s economic future.

And, in countries that have benefited from the commodity boom of the last decade, the benefits of natural resource wealth have failed to reach all members of society, fueling social tensions among those who feel left behind.

If unaddressed, inequity will continue to stoke volatility across the region.

But striving for shared growth isn’t just the right thing to do from a social and political perspective; it’s an economic imperative. World Bank research suggests that when poverty levels increase by 10 percent, growth decreases by one percent and investment falls by up to eight percent of gross domestic product (GDP).

Delivering on the promise of growth will require Latin American policymakers, along with their partners in the development community, including the World Bank, to ensure that economic gains benefit all citizens. Some countries are showing how this can be done.

In Brazil, policy reforms have helped equalise educational attainment. In 1993, the child of a father with no formal education completed four years of schooling on average. Today, Brazilian students complete between nine and 11 years of schooling, regardless of their parents’ education.

Conditional cash transfer programmes have also played a role in leveling Latin America’s economic playing field. In the 1990s, Mexico and Brazil pioneered these programmes, which provide cash payments to the poor in return for productive activities, such as enroling children in school, and mothers going for medical check-ups. Similar programmes have sprung up across the region.

We know that overcoming the region’s history of economic inequality is possible. But what will it take to achieve shared prosperity for all?

First, governments must ensure that the market doesn’t leave people behind. Latin America’s strong gains in poverty reduction in the past decade resulted from increased wages and better-targeted social policies. This trend must continue.

Second, policymakers should do more to provide disadvantaged children with quality education. Doing so would raise their productive capacity and enhance social inclusion by empowering poor children to participate more fully in their economies.

Finally, leaders must improve their ability to deliver services to the poor. Without improved capacity for quality delivery, even the best policies will mean little to their intended beneficiaries. The World Bank will provide support in this area, by helping Latin American governments take a more scientific, evidence-based approach to the delivery of development services.

Latin America has made tremendous progress in recent years. But more needs to be done. When I visit the region, I look forward to learning what it will take to ensure that opportunity and prosperity extend to all of Latin America’s people.

(END/COPYRIGHT IPS)

Excerpt:

Latin American governments have increasingly been working to lessen inequality in the region, but new data suggests their efforts vary widely in quality and impact.

Latin America has for decades been considered one of the world’s most unequal regions, with chasms between the richest and poorest in each country. At a World Bank discussion here on Monday, however, researchers suggested that these gaps have been closing over the past several years – surprising many analysts.“There is no doubt that fiscal policy, the structure of taxes, can be a powerful mechanism to change the distribution of wealth in a society.” -- Jaime Saadera-Chanduvi of the World Bank

Still, major work remains to be done in spreading these reforms to all members of society.

“The main reasons for these high levels of inequality have had to do with corruption, lack of functioning justice systems and rule of law,” Jennifer Johnson, a senior associate of the Latin American Working Group, an advocacy group, told IPS. “As yet, the gains that have been made have not reached the marginalised populations.”

Increasingly, researchers have been looking into what Latin American governments have and haven’t been doing over the past decade to achieve lower levels of poverty and inequality.

“These questions don’t go away,” Stephen Younger, an economics professor at Ithaca College, said Monday at the World Bank. “People are always concerned about the equity implications of a policy, and that includes fiscal policy.”

Early results from a study released last week highlight a wide variety of public policy choices confronting Latin American governments regarding poverty reduction and income redistribution. The report looks at Brazil, Bolivia, Argentina, Peru, Mexico and Uruguay.

“The idea of the project is not only to measure the result of what’s going on with regard to inequality, poverty and social development in Latin America,” Nora Lustig, a professor of Latin American economics and co-author of the new study, said at a panel discussion last week.

“Rather, it is to look more deeply at how this process has been happening and, particularly, how much effort governments themselves are really making.”

That analysis has now identified Argentina as the most effective Latin American country at reducing inequality. Particularly useful in this regard have been measures such as direct cash transfers, when governments give money directly to poor citizens.

Lustig and her colleagues found that this approach has helped to reduce poverty levels in Argentina by more than 60 percent.

Yet in other countries, such an approach has not been nearly as effective. In Peru and Bolivia, for instance, cash transfers have only reduced poverty by around seven percent.

According to Lustig, this discrepancy can be explained by simple spending levels.

“Peru spends much less money in all these transfers,” she told IPS. “It also had to do with who the transfers are targeted at, but it mainly has to do with spending.”

Argentina comes out as a “shining star”, Louise Cord, a sector manager with the World Bank’s Latin America and Caribbean office, said at the unveiling of the results. “And yet we have to all wonder about the sustainability of this fiscal framework.”

According to the study, Argentina has funded the majority of its public spending since the early 2000s through “distortionary taxes” and “unsustainable revenue-raising mechanisms”.

In nearly all countries throughout the region, so-called indirect taxes, on goods and services as opposed to on people and organisations, are seen as problematic for the poor. Such practices have been shown to wipe out all the effects of direct taxes and direct cash transfers, especially in Brazil and Bolivia.

“There is no doubt that fiscal policy, the structure of taxes, can be a powerful mechanism to change the distribution of wealth in a society,” Jaime Saadera-Chanduvi, director of poverty reduction and equity at the World Bank, said Monday.

“It’s critical to understand how taxes and benefits can be shaped through the distribution of incomes and, through that, increase standards of living.”

Economic blossoming

By 2009, nearly a third of the Latin America population had moved into the middle class, with just an estimated 10 percent chance of falling back into poverty.

“Despite these important gains, there is still room to move forward and I think a study like this highlights that,” said Cord.

According to some advocates, Latin American governments need to focus particular attention on corruption, in order to ensure that social policies are not used for political gain or other manipulation.

“States must begin to analyse poverty reduction initiative through coordination with marginalised sectors that have traditionally been excluded from these policy discussions,” Kelsey Alford-Jones, the director of the Guatemala Human Rights Commission, a Washington-based advocacy group, told IPS.

“They need to focus on models that meet needs identified at the local level,” he said.

Alford-Jones notes that U.S. economic policy, “including the imposition of structural adjustment programmes and free trade agreements, has played a major role in the perpetuation of poverty and inequality.”

Meanwhile, the United States is currently looking for ways to more closely engage with the rising economies of Latin America. Over the past week, both Vice-President Joe Biden and Secretary of State John Kerry made highly visible trips to the region.

Biden noted during his five-day trip that he had seen an “economic blossoming” in the region.

“What the United States needs to do is be far more flexible and less inclined to favour the demands of transnational organisations,” Laura Carlsen, director of the Mexico City-based Americas Program for the Center for International Policy, a Washington think tank, told IPS.

“In particular, it also needs to look more carefully at what’s happening to the weakest countries.”

Children in a slum in Dhaka, Bangladesh, earn 44 cents a day cutting used condensed milk cans. Credit: Naimul Haq/IPS

By Gordon Brown
WASHINGTON, Apr 20 2013 (IPS)

“Recall the face of the poorest and weakest man you have seen, and ask yourself if this step you contemplate is going to be any use to him.”

Gandhi’s challenge from 1948 should be uppermost in our thoughts this week at the Washington summit led by U.N. Secretary-General Ban Ki-moon and World Bank President Jim Yong Kim, when we examine why progress to meet the Millennium Development Goals (MDGs) has stalled.

Gandhi’s challenge is this: who will speak up for the most marginalised – the out-of-school child, the child slave, the trafficked boy, the girl bride, the street child? Who will speak up for the most vulnerable and the hardest to reach? These are the forgotten millions that the MDGs were to do most to help. And yet the most revealing conclusion of our decade-long anti-poverty crusade is that despite great, and in some cases, outstanding progress, we have done least for those most in need.

This week in Washington, in the presence of Ban Ki-moon and Jim Yong Kim, we are discovering that unless we target resources on the most vulnerable, they will continue to miss out. While the MDG process has made huge strides for universal education, it has been best at plucking the “low hanging fruit” – with some of the most marginalised left high and dry. So there are still 15 million children working full-time when they should be at school, and ten million school-aged girls who get married every year, unlikely to return to education.

For these reasons, but also because of shortages of teachers and classrooms – and often sheer discrimination against girls – a total of 500 million girls growing up today will never complete their schooling.

Unfortunately our failure is no accident: universal goals, which do not explicitly target resources on the most vulnerable, mean that those who are already the most marginalised will continue to go without. Indeed, as we formulate a new set of post-2015 anti-poverty targets, we have to recognise that future MDGs will also fall short on delivery if they do not ensure more resources go to those in need.

Adam Wagstaff of the World Bank concludes from his studies on health as well as on education that: “It’s not actually true that progress at the population level will automatically entail faster progress among the poor. If inequalities in education and health outcomes across the income distribution matter, and if we want to see ‘prosperity’ in its broadest sense shared, it looks like we really do need an explicit goal that captures inequality.”

Our failure to reach those most in need is not just ethically indefensible for anyone who believes in equal opportunities. It is self-evidently bad for the MDGs: we can’t accelerate progress unless we get serious about reaching the poor.

So a new focus on the marginalised is central to new plans put by Ethiopia, Bangladesh, Nigeria, Yemen, the Democratic Republic of the Congo and others to the Washington summit this week. Nigeria is considering extending a World Bank pilot offering conditional cash transfers to girls in northern states who represent the largest group in the country’s ten million out-of-school population.

Ethiopia – which has seen one of the most rapid expansions of education enrolment anywhere in the world – is also now targeting the out-of-school girls in hard to reach rural areas who have so far not benefitted from the country’s progress. The DRC wishes to abolish school fees, which currently deter two million pupils from going to school.

Bangladesh wants to go further. It has also decided more resources are needed for the children of the flood zones and hill areas and the victims of child labour and child marriage – but it is also making an equity goal explicit in order to reach the most marginalised. It has committed to closing the gap in attendance rates between the richest and poorest income groups and to closing the learning gap between the best and poorest performing areas. Bangladesh faces a huge uphill fight to deliver on its new policy of increasing public spending on schools. It simply does not have the money for educational investment – either domestically or from the international community – to fund its new direction.

So while the public justification for all our efforts is to help the poorest, the frailest, the neediest and most vulnerable, we are coming to realise that our focus on universal goals must be matched by extra resources for the most marginalised. Indeed, when the next set of post-2015 MDGs includes more ambitious universal targets for learning outputs and secondary education, we must do more to prevent the most disadvantaged being left further behind. Put simply – as we start to raise the ceiling, we must not forget to finish putting in place the floor.

As Pauline Rose of the UNESCO Global Monitoring Report has concluded: “Unless we have a goal that tracks progress for the poorest and richest…on education access and learning, gaps are likely to remain when we reach the next deadline for goals.”

So one of the lessons to learn from more than ten years of experience in trying to meet the MDGs is that, without corrective remedies, unequal outcomes in one generation conspire with unequal access to resources in the next to make a mockery of genuine equality of opportunity. Here we rely on and are influenced by the original thinking of Indian economist Amartya Sen, who argues that “equivalent freedom” for people who come to the table with unequal advantages requires more resources to turn the right to equal treatment into real opportunity.

Fortunately there is already a growing consensus that without this focus on inequality we cannot meet our ambitions on behalf of the poor. In education we need what Kevin Watkins of the Overseas Development Institute calls “stepping stone” targets for reducing inequalities, with timelines for 2020 and 2025 on the way to our universal goals in 2030. Further commitments are required to reduce the gap in school attendance and completion rates between poorest and wealthiest and between best and worst performing areas.

What makes me convinced that we could gain support for these measures? It is that these forgotten millions that the MDGs were to do most to help are prepared to be silent no more.

Poor rural girls now know that they do not have the freedom to choose to go to school – and that the 2015 goal of schooling for all will not be worth the paper it is written on without a commitment to greater equity. Child labourers know that they have been left behind – and that their human right to education is not being delivered by their governments or the international agencies responsible.

I am struck by the energy, creativity and determination I see in these new civil rights movements, led by Malala Yousafzai. Children are providing leadership lessons from which we can learn.

(END/COPYRIGHT IPS)

Excerpt:

By Roberto Savio
ROME, Apr 12 2013 (IPS)

The flood of elegiac articles on former British Prime Minister Margaret Thatcher is in itself a good measure of how we have all become Thatcherites without realising it. Only those who are not graced by a young age can see how the world and politics have changed so deeply since her days that it is correct to call her a “great revolutionary”.

Roberto Savio, founder and president emeritus of the Inter Press Service (IPS) news agency. Credit: IPS

Let us recall something that has been forgotten. Immediately after the end of World War II, two other major events took place. One was decolonisation and the emergence of the Third World, the other was the creation of a powerful and strong socialist bloc, led by the Soviet Union, but with offshoots in Africa, Latin America and Asia, from Angola to Cuba and China, for example. Both events had a sobering effect on the political and philosophical sectors based on capitalism, and led to an era of social democracy. Those two events gave rise to the attempt to create an international order based on cooperation and social justice at national and international levels.

This led the United Nations in 1974 to approve unanimously a plan of action for a new system of international relations aimed at permitting developing countries to regulate and control the activities of multinational corporations operating within their territory, measures to reduce the gap between North and South, and many other provisions that would be considered mere fantasy today. International cooperation was to be the basis of relations between states. A parallel dialogue among Heads of State led to the North-South Summit in Cancun in 1981, where a final plan of action would be hammered out.

Thatcher came into power in 1979, and in Cancun she met Ronald Reagan, who had been elected U.S. president a few months earlier. It was the first international test for Reagan, and he looked down with distaste on any talk about international cooperation and social justice. Prodded and sustained by Thatcher, he simply said that the U.S. had become great not because of aid. It had been the work of thousands of individuals who built railways, factories and companies that had made his country the leader of the world. From now on, the U.S. policy would be to go it alone, and do trade, not aid.

"There is no such thing as society. There are individual men and women, and there are families. And no government can do anything except through people, and people must look after themselves first." - Margaret Thatcher
From that moment, the “Reagan revolution” changed the world. The United Nations was marginalised. The U.S. accepted no international treaty. The communist bloc was to be challenged, not feared. And a permanent unrelenting campaign was waged against the concept of society, and the state. Thatcher famously declared: “There is no such thing as society. There are individual men and women, and there are families. And no government can do anything except through people, and people must look after themselves first.”

Reagan launched “bites” as a way of giving simple answers to complex questions. Pollution? “Trees pollute, not factories”.

And Thatcher? She told: ”Let us glory in our inequality”, explaining that more inequality meant that more wealth was being created by savers at the top of the economic pyramid, presumably to trickle down via new direct investment. She called Nelson Mandela “a terrorist”, and later she would praise dictator Augusto Pinochet as a “champion of democracy”.

Slowly, the two conservative parties, the Republicans in the U.S. and the Tories in Britain, underwent an anthropological metamorphosis. Gone was “compassionate conservatism” or “social conservatism”, and an ideological tide swept in the glorification of wealth, the acceptance of injustice as a fact of life, the demonisation of the State as a brake on the market and individual advancement, and the argument that welfare, trade unions and all other instruments of equity were instruments of support for the lost and unproductive elements of society.

Reagan fired the air controllers, and Thatcher dismantled the coal miners’ unions. It was all summed up in Thatcher’s words: “Marks and Spencer [the supermarket chain] have triumphed over Marx and Engels”.

Reagan left the U.S. saddled with a huge deficit and growing inequality. When she was elected, Thatcher found the poverty level at nine percent, when she left it stood at 24 percent.

Thatcher and Reagan opened the path of legitimising the least social aspects of individuals and politics: selfishness, ostentation of power and status, money over culture, and the idea that those who win do so because they are better. The CEO of JP Morgan, Jamie Dimon, shut up a shareholder in a debate, saying: “I am right because I am richer than you”.

This kind of culture was unknown before Thatcher and Reagan, and now has created the Madoffs, the Berlusconis, the Murdochs and many other new mutants. We have gone through a profound sociological, cultural and anthropological change.

Over time the tide has grown, leading to a loss of identity of the left, which has become neutered by the long drive to uncontrolled capitalism as the only solution.

The old values have lost legitimacy. The new values are profit, competition, wealth: countries act on “defence of their interest”. Thatcher was able to effectively fight for special privileges in the European Community, sowing the seeds for the eurosceptics that now condition the British government. John Major, Tony Blair, and now David Cameron embarked on a number of actions, from the war in Iraq to the present strict medicine of austerity, that would have been unthinkable without her legacy.

And the same happened in the U.S.. Bill Clinton did not even try to revert to pre-Reagan policies, and George W. Bush just resumed the Reagan revolution. The Republican Party is prisoner of the extremists of the Tea Party, and Barack Obama has been obliged to make so many compromises that much of his action has lost real punch.

The dream of a united Europe is in serious jeopardy. There is no solidarity between Northern and Southern Europe. The fact is that there are no common values able to cement international cooperation.

Today, we have no international governance, in the real sense of the word. The United Nations has been re-dimensioned to the issue of development. The world is not even able to take concrete measures on climate change, which is a clear threat for humankind. On the contrary, many companies are looking forward with enthusiasm to the melting of the Arctic, for the new avenues of traffic and mineral exploitation that this will open up. Finance is out of control and wealth has become obscene.

In 2012, the wealth of the world’s 100 richest individuals grew by 240 billion dollars: enough to solve the problems of poverty in the world. Yet, not a single voice is calling for redistribution. Those 100 were already the richest, so presumably they would not suffer too much if 75 percent of their added wealth was taken.

Pesident François Hollande, who tried to present this idea in France, has become an object of shame. The disaster of finance has created 100 million new poor worldwide. Eurostat says youth unemployment is 22.4 percent. Why is there not a real reaction? Because we have all become Thatcherites now.

(END/COPYRIGHT IPS)

Excerpt:

World Bank President Jim Kim has unveiled a series of new institutional goals aimed at ending extreme poverty by 2030 and focusing on the promotion of “shared prosperity” – increasing the incomes of the poorest 40 percent in each country while placing increased focus on dealing with climate change.

World Bank president Jim Kim urged countries to “break the taboo of silence” around inequality. Credit: World Economic Forum/cc by 2.0

In a major speech at Georgetown University here on Tuesday, Kim fleshed out themes that he first introduced last fall, outlining a vision for how the World Bank can evolve and remain relevant in the coming decades. With an annual lending budget of around 30 billion dollars, the Washington-based bank remains one of the world’s largest development institutions.

“We are at an auspicious moment in history, when the successes of past decades and an increasingly favourable economic outlook combine to give developing countries a chance – for the first time ever – to end extreme poverty within a generation,” he said.

While those living on less than 1.25 dollars a day stood at 43 percent of the developing world in 1990, by 2010 that figure had fallen to 21 percent. The new plan would now bring this number down to three percent by 2030.

Kim warned that the new goals were extremely ambitious and would require “concerted global action on an unprecedented scale”. While cutting global extreme poverty levels in half – the first of the Millennium Development Goals (MDGs) – took some 25 years to accomplish, Kim said the 2030 goal would require cutting poverty levels in half, then in half again, then nearly in half a third time.

“If countries can achieve this, then absolute poverty will be brought below three percent,” he said. “Our economists set the goal line here because below three percent the nature of the poverty challenge will change fundamentally in most parts of the world. The focus will shift from broad structural measures to tackling sporadic poverty among specific vulnerable groups.”

The speech is being widely welcomed by development agencies and scholars.

“It’s refreshing to see a world leader outline a bold, focused and measurable vision,” Didier Jacobs, acting head of the Washington office of Oxfam, a humanitarian agency, told IPS. “Oxfam applauds refocusing the World Bank on eradicating extreme poverty while reducing inequality and curbing climate change.”

Indeed, climate change and inequality will now constitute a primary focus in all World Bank projects. On the first issue, Kim stated the bank is currently exploring ways to institute carbon markets and eliminate fossil fuel subsidies, among other initiatives.

On the second, Kim urged countries to “break the taboo of silence” around inequality, warning that around 1.3 billion people continue to live in extreme poverty despite massive economic leaps over the past decade.

Still, some are worried that the bank’s focus on the poorest 40 percent in each country will not do enough to address this growing inequality.

“The shared prosperity goal lacks a target,” Oxfam’s Jacobs says. “It is not enough to increase the income of the bottom 40 percent in every country. Income of the poor should rise faster than average and the gap between the very rich and poor should be reduced.”

As the bank begins to implement Kim’s new vision, Jacobs is urging the institution to commit to specific policies and investment priorities, including free universal public health and education services, fairer taxation, and replacing fuel subsidies with programmes that build the resilience of poor people in the face of climate change.

South-South delivery

Kim’s new vision for the World Bank comes in the context of two milestones. First, this week marks a thousand days until the end of 2015, the deadline for achievement of the MDGs.

While Kim said progress towards the MDGs, which are to be achieved by 2015, has been notable but uneven, he also pointed out that many developing economies have weathered the international economic crisis better than developed countries. World Bank forecasts currently suggest developing economies as a whole will grow by 5.5 percent this year, followed by incremental increases the following two years.

Second, Tuesday’s speech comes just days after five middle-income countries – Brazil, Russia, India, China and South Africa, known as the “BRICS” – unveiled new plans for a BRICS-funded development bank, to be initially capitalised at around 4.5 trillion dollars, that would work in concert but also in competition with the bank.

Due to this and other fast-changing dynamics, many are suggesting the bank will need to adopt new models to maintain its relevance. On Tuesday, Kim announced a new institutional focus on what he’s calling a “science of delivery for development”, which he says will position the bank to facilitate networking between development practitioners in developing countries.

“Knowledge transfer of new models of downstream work that takes a more social enterprise approach, rather than being state led – this is what is fresh and exciting in the new models of global South-South collaboration currently taking place,” Asif Saleh, communications director for BRAC, an international development organisation based in Bangladesh, told IPS.

“On a mass scale, how we highlight such partnerships will determine the success or failure of our fight against global poverty.”

While others suggest that development and delivery issues are more art than science, the initiative in general appears to be signalling a new direction for the World Bank.

“‘Science’ suggests that these approaches work the same the world over, whereas delivering development is entirely context dependent,” Charles Kenny, a senior fellow at the Center for Global Development (CGD), a Washington think tank, told IPS.

“Nonetheless, helping partners learn from one another is clearly a big future role for the bank. This would appear to suggest that the bank is moving away from the one-size-fits-most model and towards one that admits that what will work in development will depend on country circumstances and everyone learning together.”

Despite the scope of the new goals unveiled on Tuesday, Kenny says that Kim’s speech outlines a realistically scaled-down vision of the bank’s long-term global role.

“If absolute poverty is gone in 2030, the bank will need something to do, so this is a vision for the bank’s role in a richer world,” he notes.

“A new model where the bank is focused on small subsets of people and global public goods provision, rather than trying to do all of development, is a very pragmatic approach. A bank that focuses on where it can have the biggest impact – on remaining pockets of absolute poverty, on cross-country learning – seems like a very sensible agenda.”

Twelve-year-old Maruf lives in a shanty in Nayanagar, close to a Dhaka suburb. He works at a nearby car workshop, fixing luxury car engines for about six dollars a month. He shares this meagre income with his family of four. Credit: Naimul Haq/IPS

By Carey L. Biron
WASHINGTON, Mar 21 2013 (IPS)

A leaked copy of a major World Bank strategy paper, outlining a new institutional approach to tackling poverty through 2030, has worried some humanitarian groups and anti-poverty advocates, who say the bank has failed to suggest mechanisms that would allow it to adequately track or deal with growing levels of income inequality around the world.

Critics are claiming that the Washington-based World Bank, the world’s largest international development lender, appears to be including an inordinate focus on economic growth for all segments of society, without addressing any redistribution of upper-level incomes.

Global income inequalities are currently said to be at 20-year highs, figures that have worried policymakers and economists at all levels. A November report by Save the Children, an aid agency, found that the gap between the richest and poorest children had grown by 35 percent since the 1990s – the timeframe used to monitor progress towards the Millennium Development Goals (MDGs), which are supposed to be achieved by 2015.

“The global consultations on post-2015 delivered a strong consensus around the importance of inequality,” Alex Cobham, a research fellow with the Europe office of the Center for Global Development (CGD), a Washington think tank, told IPS.

“That process also highlighted that this was not about simply identifying those at the bottom to target them better, but about recognising the damage that inequality does to societies, including people at the top as well as the bottom; and that, as such, the response must be to tackle inequalities directly, not to pursue targeting alone.”

The content of the World Bank documents, draft copies of which can be found here and here, were slated to be discussed by the institution’s executive directors on Thursday. The strategy lays out two broad new goals.

First, in line with the bank’s broad aim of ending poverty, the approach paper proposes bringing those living under “extreme poverty” (defined as subsisting on less than 1.25 dollars per day) down to three percent globally by 2030. This ambitious goal, the bank notes, would require a roughly one percent reduction in poverty each year.

Second, the bank proposes a new focus on “shared prosperity … to promote the income growth of the bottom 40 percent of the population in every country”. It is this broad aim that is generating particular concern.

David Woodward, a former advisor at the International Monetary Fund (IMF) now at the New Economics Foundation, a London think tank, told IPS in an e-mailed analysis that the current global context, particularly in dealing with the threat of climate change, calls for a “major shift in development strategy”. But, he notes, the new strategy offers essentially a “business-as-usual” approach.

“The focus on the incomes of the poorest 40 percent in each country would be welcome if it were given primacy over overall economic growth as an objective; but the reverse seems to be the case,” Woodward says.

“If the Bank were serious in wanting to promote ‘shared prosperity’ (particularly within global carbon constraints), this logic would be reversed.”

In that case, he says, the objective should be to maximise income growth – alongside public services – for the bottom 40 percent, while the remainder of the population would be a “secondary consideration”.

Although the World Bank generally does not comment on leaked documents, a bank spokesperson told IPS: “This paper is an early draft, which we expect will be further revised before being finalised. It tracks with the vision the World Bank president outlined in a speech in Tokyo in the fall of 2012, where he looked to end poverty and build shared prosperity. We expect President [Jim] Kim to expand on this ambitious vision in the coming weeks.”

Prosperity, inequality incompatible

The new draft strategy documents do discuss the issue of inequality, and indeed make some strong fundamental statements on the issue.

In introducing its goal of a reduction in extreme poverty to three percent internationally by 2030, the bank warns that such an aim “implies a future faster, more sustained decline in poverty in many developing countries, at a pace not observed in the past, and in the context of increasing inequality in many countries.”

Later, it states specifically, “Sustained progress in achieving shared prosperity is incompatible with a steady increase in inequality … Growth of the bottom 40 percent that is consistently lower than the average income growth of a country should be a cause for concern, as rising inequality may eventually abate the growth process itself by causing political instability, distorting incentives, and reducing the dynamism and mobility in society.”

No country with high levels of inequality, the paper notes, has ever progressed beyond “middle income” status.

Beyond such strong rhetoric, however, critics are suggesting that the lack of solid focus on directly addressing inequality is ominous.

“The World Bank has recognised that inequality is the enemy of shared prosperity, a very welcome move, and we applaud Jim Kim’s vision for reforming the bank to ensure it does a better job of fighting poverty and inequality,” Didier Jacobs, acting head of the Washington office of Oxfam International, an aid group, told IPS.

“But the bank’s shared prosperity agenda should be clearer, more categorical, and go further. Fostering income growth of the bottom 40 percent of the population in every country is an activity, not a goal. The World Bank must commit to growing the bottom 40 percent faster than the average, and reducing disparities between the top and bottom of society.”

As the international development conversation has placed increasing focus on the centrality of inequality, some have suggested a major shake-up needs to take place with how this indicator is generally measured. The current method, known as the Gini index, has been in use for the past century, but some say it doesn’t offer important details for policymakers attempting to ease issues of inequality.

This week, CGD’s Cobham co-published a paper that suggests looking, instead, at the ratio of incomes of the top 10 percent of a country’s earners to the bottom 40 percent. Doing so, the paper notes, could be useful for policymakers and citizens alike, in that it clearly and directly ties inequality to both top and bottom earners.

“I was disappointed to see the World Bank use the language of inequality but then shy away from tackling it, preferring instead to broaden the idea of targeting to cover the bottom 40 percent,” Cobham told IPS.

“It would be great to see the World Bank give this new approach serious consideration.”

By Roberto Savio
ROME, Mar 11 2013 (IPS)

For those who think that Occupy Wall Street, the Indignados in Spain, the World Social Forum and the numerous manifestations of protest worldwide are expressions without concrete outcomes, the result of the Swiss referendum on Mar. 3 on capping the salaries and bonuses of banks executives should make them think twice.

Roberto Savio, founder and president emeritus of the Inter Press Service (IPS) news agency and publisher of Other News. Credit: Courtesy Roberto Savio

Like it or not, two-thirds of the Swiss, who are not exactly a revolutionary people, have given the shareholders of financial institutions the right to decide salaries and bonuses of their executives.

Another referendum — on limiting the salaries and bonuses of company executives from all sectors to a figure that does not exceed 15 times that of the average salary of their employees — is due shortly.

At the same time the European Commission and the European Parliament have reached an agreement on capping bank executives’ bonuses at an amount equal to their annual salary. If the shareholders decide, it can be twice their annual salary, but no more.

The howling of the bankers, while expected, is very interesting in explaining the reasons for their rejection of the results. The first, basically from the United Kingdom, is that the gap between London and Europe is increasing. The financial sector accounts for ten percent of the British gross national product (GNP) and the Anglo-Saxon world has been riding the wave of bankers’ increasing bonuses and salaries much more than elsewhere. In a good year, a bonus can be ten times higher than a salary.

But it is a fact that the UK is moving, as the last local elections showed, toward an increasingly anti-European sentiment, and as long as London keeps applying the brakes, Europe will never become more integrated.

Second, the bankers say that the result will be higher fixed salaries, which would hurt shareholders even more, while high bonuses are more flexible. Thus good executives would move to Wall Street, or Hong Kong, Shanghai or Tokyo, and Europe would be left with second-class executives.

Now, it is widely known that high bonuses reward risk-taking, which is one of the causes of the dismal performance of the banking system. Furthermore, this argument ignores that there is a growing consensus on the need to go back to the pre-Bill Clinton era, when commercial and investment banks in the U.S. were separated, precisely to reduce the high-risk culture that has led to increased unemployment and poverty worldwide.

The third argument is the most interesting, and shows how much the world of banking has grown into its own delusion. Bonuses are mostly given in the form of a “clawback bonus”; they are deferred and often paid in the form of stocks, and they can be retracted. The big banks, like the Royal Bank of Scotland or Barclays, have used clawbacks, and bankers say that this threat has itself become a powerful deterrent to risky or unethical behaviour.

Now, no data are available on how much this clawback has been used anywhere. What is available, however, is information on the innumerable fines that have been applied to the big banks for fraud. Suffice to remember that the very lenient American regulators have slapped fines of more than three billions dollars on the big banks.

Let us just recall some specifics: 8.5 billion for fraudulent foreclosures on home loans to ten banks (including Bank of America, Citigroup, JP Morgan Chase), followed by a similar settlement of 557 million dollars to Goldman Sachs and Morgan Stanley. The case of the fraudulent fixing of the Libor rate (the rate of exchange among banks) has cost UBS alone 1.5 billion dollars up to now. The director of Barclays has been obliged to resign.

Where is the effect of the clawback bonus as a wall against risky and unethical behaviour?

The world crisis, which was entirely engineered by speculative finance in the U.S. and erupted in 2008, coupled two years later with the crisis of sovereign debt, an entirely European affair. This has led to the unprecedented blackmail of governments by the markets and to the uniform medicine of austerity, with Greece as the clearest example of its impact on the people.

Viewed in this context, news that the 100 richest people in the world added 240 billion dollars to their wealth in 2012 is even more obscene. Clearly, they had no need of that money, in human terms.

The top two percent of the world’s population (60 million people) now possesses as much wealth as 2.5 billion people. The top 0.01 percent (600,000 persons) has as much wealth as two billion people.

There are now 1,200 billionaires in the world. Simultaneously, we are facing a serious food problem. Every day, there are 192,300 new mouths to feed, 70 million every year. According to the Food and Agriculture Organisation (FAO) the reserves of food have gone down by 2.6 percent, while the cost keeps going up (cereals by 10 to 35 percent, depending on the product).

Yet, according to the World Bank, we throw away 40 percent of food in the rich countries. So, with the 240 billion piled up in a year by the 100 richest people, we could eliminate many of the world’s problems.

Two billion more people are expected in a few decades (by 2050). The system is not able even to accommodate the current seven billion. How will it accommodate two billion more, coming from the poorest parts of the planet?

The answer is obvious: we have the wealth, but it is not distributed justly. As the saying goes, the rich become richer while the poor get poorer.

Consequently, people are getting fed up, as the Swiss referendum has clearly shown. Everywhere discontent is seeping into the polls, with protest parties flourishing everywhere.

We are in transition to a different system. This can be done through peaceful and cooperative means, or by a continuation of this growing social injustice. History has many lessons on this issue, and it is useless to recall them. We all read them at school, even the 100 billionaires. So, as the Swiss referendum shows, it is not awareness that is lacking: it is political will.

(END/COPYRIGHT IPS)

Excerpt:

A Santiago demonstration calling for decent minimum wages is violently repressed in July 2012. Credit: Fernando Fiedler /IPS

By Marianela Jarroud
SANTIAGO, Jan 18 2013 (IPS)

Chile’s positive economic performance in 2012 is not enough to boost President Sebastián Piñera’s waning popularity, as many Chileans believe the country’s much-touted growth does nothing to compensate or solve decades of accumulated injustices, several analysts told IPS.

Chile has successfully sidestepped the European economic crisis, closing the last fiscal year with a 5.5 percent growth in its gross domestic product (GDP) and an inflation rate of 1.5 percent.

At the end of 2012, unemployment affected only 6.2 percent of the economically active population, with salaries growing at a rate of six percent, according to official figures.ries

The government hailed each of these positive indicators as proof of the strength of Chile’s economy. In an effort to showcase these achievements, a dedicated web portal was launched to highlight the progress made by the country’s right-wing administration headed by Piñera who, before running for president, was a successful businessman.

Nonetheless, the president’s popularity remains low at around 30 percent, with a significant percentage of people disapproving of his administration and only 28 percent in favour of his economic and employment policies.

Mauricio Morales, a political scientist at the Diego Portales University, explained, “The percentage of approval is determined not only by economic indicators but also by a president’s personal traits.”

“Piñera is not perceived as an honest or approachable president,” in contrast to his predecessor, the socialist Michelle Bachelet, who governed from 2006 to 2010 with an approval rate of over 50 percent.

This makes Bachelet — the current executive director of UN Women – the candidate most likely to win the October presidential elections, although she has yet to announce her decision to run.

Morales went on to say that polls usually reveal a difference between the level of approval for the economic policies implemented by a government and the popularity of its president.

However, “in Piñera’s case, both indicators are practically identical, and this shows just how relevant personal traits are” in determining popularity.

Manuel Riesco, an economist with the Centre for National Studies on Alternative Development, observed that the fact that Piñera’s low popularity has sunk so low and that Chileans are not very impressed by these economic indicators are a reflection of the “accumulated injustices” suffered by the population, which are ignored by the government.

“The discontent among Chileans has nothing to do with economic performance, but rather with the widespread abuse they have suffered over the past two decades, both in boom cycles — like today’s — and stagnation periods alike,” he said.

According to Riesco, “People mistakenly believed that the end of the dictatorship, which stretched from 1973 to 1990, would put a stop to the abuses they suffered. But unfortunately that did not happen, because while the political system was democratised, the model in place remained basically the same, with no substantial changes.”

The economist observed that “Chileans are well-informed citizens and they’re also very patient. But after 10 years their patience starts to wear thin, and it’s been 20 years now.”

In his opinion, that explains the current “new spur in mass participation in public matters. And this participation won’t subside until solutions to the most critical issues are found.”

Social protests continued in Chile throughout 2012, when a call for structural change in politics and government took centre stage, overshadowing the previous year’s struggle for democratisation of education.

While the undisputed champions of change in 2011 were students, in 2012 activism spread across society and the focus of demands shifted to environmental, economic and social issues, converging in a call for constitutional reform through the convening of a constituent assembly.

The current constitution, in force since 1980, was drafted during the dictatorship of Augusto Pinochet and is one of the regime’s legacies. Social activists say its provisions hinder the institutional development necessary for the expansion of democracy and the establishment of a more just and progressive society.

Ordinary Chileans join academic, political and social experts in criticising the government’s failure to translate economic growth into a reduction of social injustice, poverty or environmental degradation.

Mercedes Muñoz, who has been a teacher for almost 40 years and is now close to retirement, told IPS that the figures announced by the government are not “at all” reflected in the day-to-day lives of most Chileans.

“The government does not seem to be investing in education or health, or in anything that will make our lives better and give us a sense of security, or that will guarantee that a life’s work will provide a decent retirement, or that putting your kids through school won’t mean getting into debt for life,” she said.

Muñoz added that these positive economic indicators “are enjoyed only by the country’s wealthiest” and stressed that if Chile’s macro-economy comes out unscathed from the global crisis “it will be at the expense of the people and because of their sacrifice”.

Long held up as the “Latin American miracle” because of its dynamic economic growth and poverty abatement, Chile is also known for having one of the widest gaps between rich and poor of all of Latin America.

According to the 2012 National Socioeconomic Characterisation Survey (Casen), in 2011 the income of the richest sectors of Chilean society was 35 times more than that of the poorest sectors, down from 46 in 2009.

Riesco explained that, despite the negative perception of the population, “we should certainly be celebrating the country’s success in weathering the global financial crisis” that broke out in 2008 in the United States and which shifted its epicentre to Europe in 2010.

But he expressed concern over the fact that that success is due to an external factor: “the unusually high price of copper, the country’s main resource.”

The income from copper “is practically all rent, that is, the excess above the cost of copper production. Therefore it’s not value added by Chilean labour but a rent transferred from abroad and for the most part appropriated by the large mining companies,” he said.

Mining accounts for at least one fifth of Chile’s GDP, and as mining resources “are by definition limited, they can disappear, as occurred with nitrate deposits in the past”.

Moreover, “the price of copper will inevitably drop, bringing Chile’s economy down to its true dimensions, which is the added value generated internally, or, if you prefer, the sum of its costs of production; everything above that is rent, which is fleeting,” he said.

Less than a month into what will be a year marked by presidential and legislative elections, the government has been quick to project that by the end of 2013 the economy will have grown by five percent, inflation will have dropped at an annual rate of three percent and fiscal spending will have increased by five percent.

Despite this optimistic outlook, according to Morales if “Piñera has not yet garnered much popularity” it’s doubtful that he will do so in 2013, his last year in office, and he will “face, like never before, the loneliness of power.”