These countries were doing best at tackling inequality before COVID-19

Before COVID-19 swept across the globe and killed more than a million people, only one in six countries were spending the recommended 15% of their budget on health.

That combined with a lack of basic workers’ rights, including sick pay, and weak social safety nets left many countries “critically” unprepared to deal with the pandemic, new analysis from Oxfam and Development Finance International (DFI) reveals.

The Commitment to Reducing Inequality Index, now in its third edition, ranks 158 governments on their policies in three pillars pivotal to levelling the playing field:

1. Public services, which include education, health and social protection

2. Progressive taxation, including corporate income tax and tax collection

3. Labour, which includes women’s rights in the workplace and the minimum wage

“Governments’ catastrophic failure to tackle inequality meant the majority of the world’s countries were critically ill-equipped to weather the pandemic,” said Chema Vera, Oxfam International’s interim executive director.

“No country on earth was trying hard enough to reduce inequality and ordinary people are bearing the brunt of this crisis as a result. Millions of people have been pushed into poverty and hunger and there have been countless unnecessary deaths.”

The index is being launched ahead of the World Bank and International Monetary Fund virtual Annual Meetings next week.

Here are some of the countries working hardest to reduce inequality.

The top 10

Eight of the top 10 countries deemed to be doing the most to reduce inequality are in Europe, with Norway topping the 2020 CRI Index – and New Zealand and Canada the only outliers.

Norway also comes top in the labour ranking – which includes rights and wages – and has the sixth lowest income inequality in the world, according to the index.

But even the best-performing countries could do more, say Oxfam and DFI.

“Overall inequality and poverty have risen during the last decade and 15 OECD countries perform better than Norway on wealth inequality.”

Denmark, in second place, has seen 20 years of taxation policies that have increased inequality, the report says.

“In the last decade, income growth has stagnated for the 40% with the lowest incomes, while the richest 10% now own nearly half of the country’s total wealth.”

And the CRI Index says a drop in spending on education, which evidence shows can reduce inequality, is “alarming”. It’s thought the new Danish government will attempt to reverse some of these negative trends.

Germany ranks third, but its education spending rate is as low as that of South Sudan, one of the countries at the bottom of the public spending pillar – at 9.35% of government spending.

While Belgium, in fourth place, ranks only 37th on tax, partly due to recent cuts in corporate income taxes.

Rising up the ranks

The report also recognizes the efforts of low- and lower-middle-income countries that may not score as highly overall, but are taking steps to reduce inequality, particularly during the pandemic.

“Togo and Namibia have provided monthly cash grants to informal workers who lost their jobs because of lockdown measures.”

Despite its relatively low GDP, Ukraine has one of the lowest rates of inequality in the world, and has increased frontline healthcare workers’ pay by up to 300%, according to the CRI Index.

Coming 113th on the index, Bangladesh has “stepped up” in the pandemic, by spending $11 million on bonus payments for frontline healthcare workers, most of whom are women.

Sierra Leone has increased education spending this year, in a bid to make secondary education free. It has also clamped down on tax evasion by mining companies, introduced a property tax in its capital, Freetown, and increased its minimum wage.

Viet Nam’s response to COVID-19 has “been among the best in the world”, according to the report. And since the 2018 index, it has increased its health spending, while the government is considering making reducing inequality a core part of its upcoming 10-year plan.

Other notable mentions for countries that were tackling inequality pre-COVID are: South Korea, which boosted the minimum wage; Botswana, Costa Rica and Thailand, who all increased health spending; and New Zealand, whose Prime Minister, Jacinda Ardern, launched a “well-being” budget to tackle issues like child poverty and inequality.

Taking action

While the COVID-19 pandemic and response has brought pre-existing inequalities into sharp focus, there are urgent steps every country can take to reduce them.

The report’s recommendations include “increasing taxation of the richest corporations and individuals”; increased spending on public services and social protection; greater solidarity among the international community around extending the current debt standstill through 2022; and improving data on inequality to accurately and regularly monitor progress.

The World Economic Forum's UpLink platform has launched the COVID Social Justice Challenge, a competition to find ideas and solutions that tackle social inequalities and injustices within the COVID response and recovery.

“Extreme inequality is not inevitable, and you don’t have to be a wealthy country to do something about it,” said Matthew Martin, Development Finance International’s director.

“We know that policies such as free public healthcare, safety nets for people who can’t work, decent wages and a fair tax system, have been proven to fight inequality. Failure to implement them is a political choice – one that COVID-19 has exposed with catastrophic economic and human costs.

“Governments must learn the lessons of this pandemic and seize this opportunity to build fairer, more resilient societies and a better tomorrow for us all.”