Published in The Independent on Wednesday, 17 April 2019
In all countries the most commonly known and powerful factor is the inequality of the initial distribution of wealth and human capital
Shazzad Khan
This year the meeting of HLPF (High-level Political Forum) on Sustainable Development will be held in New York during 9-18 July. HLPF is an annual platform of the United Nations for conducting global dialogue on the 2030 Development Agenda. As a member of the Forum, Bangladesh government and the civil society organisations will participate in the dialogue with the view to presenting the progress so far in realising the SDGs (Sustainable Development Goals) by 2030 along with its challenges and opportunities. This year dialogues will be held on identified SDGs of Goal 4, 8, 10, 13, 16 and 17. It is expected that among these Goals, Goal-10 on reducing inequality will get highest priority as it relates directly to many other Goals including the utmost challenge of eliminating poverty from the globe.This essentially emphasises on more ‘even distribution’ of income and wealth among the poorer section of economic ladder targeting inequality reduction.
Last December Bangladesh Government published its SDGs Progress Report 2018. In this report the Government has admitted that inequality in Bangladesh is rising alarmingly and reigning disparity between rich and poor has become a leading priority for country’s development.
As per United Nations, inequality still persists in higher degree in many countries all over the world and large disparities remain in access to health, education, sanitation, employment and other services and resources. Unfortunately, Bangladesh is one such country.
Oxfam’s yearly inequality report (CRI 2018) serves the most abjectpictureof this rise in disparity. Eighty-two percent of the entire global wealth created in 2017 went straight to the richest one percent of the world’s population. The poorest 50 percent 3.7 billion people, on the other hand, received zero percent of that wealth.
In case of Bangladesh, as per CRI Index 2018, it has been ranked as 148th from below 157th from among the countries which are doing very little to reduce the gap between the rich and poor.
The latest Household Income and Expenditure Survey (HIES) released by Bangladesh Bureau of Statistics (BBS) in 2016 found that the income share of the poorest 10 percent of the household population received 1.01 percent of the total national income in 2016 which was 2 percent in 2010. In comparison, the richest 10 percent of the population owned 38.16 percent of the national income in 2016 which was 35.84 percent in 2010. This means the rich are growing richer in income and wealth day-by-day.
Citing similar data from the 2016 HIES, the Government has acknowledged in its SDGs Progress Report that income equality increased in the last six years with a Gini Coefficient value of 0.483 in 2016. While the BBS survey mainly sheds light on growing income inequality, wealth inequality is even worse. According to estimates by the CPD(Centre for Policy Dialogue), wealth inequality in terms of Gini Coefficient stands at a staggering 0.74. It is said that when Gini Coefficient of income inequality is above 0.5 a country remains in the high risk of social unrest.
To perceive the sources of economic inequality is not a difficult task. In all countries the most commonly known and powerful factor is the inequality of the initial distribution of wealth and human capital. Studies have shown that children born in wealthy families have a huge starting edge in both wealth and human capital that tend to have multiplier effects over time. As a result the social climbing opportunities for the poorer segment of the society tend to be much more limited than for the rich.This initial lop-sidedness is a powerful barrier to social upward mobility for the poor. Overcoming this lop-sidedness requires a long-term commitment from the government to a range of policies that help equip the poor with human capital while improving the opportunities for them to engage in economic activities. Practically, the experience of the European countries, especially of the Scandinavian regions, shows how public finance policies (taxation and social spending) can be a powerful source of lowering income inequality. These countries tend to tax the rich heavily while using the resources to finance a range of social spending on health, education and social protection (income transfers) for the poor and vulnerable.
In contrast, a major problem in Bangladesh is the very low levels of public spending on human development. Public spending on education is a mere 2.4% of GDP.As compared to this, Argentina and South Africa each spend 6.0% of GDP on education, while Malaysia and Indonesia spend 5.8% and 4.6% of respective GDPs. Scandinavian countries like Sweden and Norway spend even higher (6.8% and 6.5% of GDP respectively). Public spending in Bangladesh on health is similarly very low (only 1.1% of GDP).
Another factor that has contributed substantially to better income distribution in European countries is the spending on social protection. On average, they spend 12-19% of GDP on social protection, mainly in the form of income transfers to the poor and vulnerable families. In Bangladesh social protection spending is only 2.2% of GDP – if civil service pensions are excluded, then this amounts to a mere 1.6% of GDP.
The economic trend shows that Bangladesh is now the 31st largest economy in the world in terms of Purchase Power Parity (PPP) and will become the 28th by 2030. It is expected that Bangladesh will be the 23rd largest economy in the world by 2050 as a developed nation.
Indeed it indicates that the country is heading through a stunning growth. However, this growth progression may become meaningless if eventually we have turned out to be a country having a ‘growth without equity’. If as a country we want to prove that Bangladesh is imbued by the basic philosophy of liberation war, where equality among people had been its cornerstone, then we have to address the growing inequality in the first place with country’s services and resources distributed among its people efficiently, effectively and equitably.
The writer works for Manusher Jonno Foundation
Email: Shazzad@manusher.org
