Fairer Economies: What are the challenges in making economies more sustainable?

Without a doubt, human life has improved a great deal in recent decades. For most of human history, life expectancy at birth was around 20-30 years, but we’ve made incredible gains since 1950. About 1.1 billion people have moved out of extreme poverty since 1990, and, income inequality has been trending downward in a lot of countries. Globalization and digitization have led to greater access to healthcare, education and job opportunities around the world.

Despite these gains, poverty, hunger and gaping disparities persist. As World Economic Forum Founder and Executive Chairman Klaus Schwab explained in the Global Social Mobility Index 2020: “Inequality is rising even in those countries that have experienced rapid growth. The social and economic consequences of inequality are profound and far-reaching: a growing sense of unfairness, precarity, perceived loss of identity and dignity, weakening social fabric, eroding trust in institutions, disenchantment with political processes, and an erosion of the social contract.”

No matter how far we’ve come, humanity’s achievements are unfair – and simply unsustainable – if people lack the ability to move out of poverty and realize their full potential.

Now, COVID-19 has widened the gaps. As the UN SDG Progress Report 2020 explained, “the importance of robust social protection systems for safeguarding the poor and vulnerable is becoming clearer than ever.”

“It is hitting the most vulnerable people hardest, and those same groups are often experiencing increased discrimination,” continued the report. “The wider effects of the pandemic will likely have a particularly damaging impact on the poorest countries. If a global recession leads to reduced flows of development resources, that impact will be even more severe.”

With the Great Reset, the world has an opportunity to address inequality with “long-overdue reforms that promote more equitable outcomes” and “harness[ing] the innovations of the Fourth Industrial Revolution to support the public good, especially by addressing health and social challenges,” explained Schwab.

SDG 1: No Poverty. By 2030, eliminating extreme poverty and reducing the number of people in poverty in all of its dimensions. This requires implementing social protection measures, ensuring equal access to economic resources and services, and building the resilience of the poor and vulnerable, especially in the face of climate change.

SDG 2: Zero Hunger. By 2030, ending hunger and malnutrition, and guaranteeing access to safe, nutritious and sufficient food. This requires ensuring sustainable food production systems and resilient agricultural practices, maintaining genetic diversity of animals and crops, and correcting and preventing trade restrictions and distortions in world agricultural markets, among other measures.

SDG 8: Decent Work and Economic Growth. Targets include full and productive employment for all men and women, sustaining per capita economic growth and achieving higher levels of economic productivity, with a focus on high-value added and labor-intensive sectors. Additional targets focus on job creation, entrepreneurship, protecting labor rights and ending practices like forced labor, modern slavery and trafficking.

SDG 10: Reduced Inequalities. By 2030, this goal aims to progressively achieve and sustain income growth of the bottom 40% of the population at a rate higher than the national average. Reducing inequalities also requires ensuring social, economic and political inclusion and equal opportunity for all, and adopting policies and regulations that promote equality and improved monitoring of global financial markets and institutions. Other targets focus on LDCs and migrants.

Some progress has been made in recent years – like real income growth for the poorest 40% of the population in 73 countries, including growth higher than the national average in about half of them.

But progress has mostly been slow, particularly on poverty, according to the UN SDG Progress Report 2020 – and in the case of hunger, it’s reversed course. Now, with a global pandemic and economic crisis, we should expect we’ll lose gains made on many of these targets.

The proportion of people living in extreme poverty fell from 15.7% in 2010 to around 8.2% in 2019. But even before the pandemic and economic crisis, 6% were still projected to live in extreme poverty in 2030 – thereby missing the target.

Similarly, workers living in extreme poverty fell from 14.3% in 2010 to 7.1% in 2019. But in 2019, global unemployment was 5%, and as high as 11% in Northern Africa and Western Asia. For women and young workers, rates were higher.

Progress on hunger is dismal, with the number of people going hungry increasing from 60 million in 2014 to 690 million in 2019. And ensuring access to food doesn’t mean people will necessarily have access to sufficient nutritious food; 750 million still face “severe food insecurity,” continues the progress report, with the situation worsening in sub-Saharan Africa and Latin America. Hunger has broad impacts, leading to greater risk of poor cognitive development, common infections, wasting and death for children.

The impact of COVID-19 is expected to be severe. The poverty rate is projected to reach 8.8% – the first increase since 1998. As a result of the pandemic, 71 million more people will live in extreme poverty, while 132 million risk food insecurity. As many as 42% of jobs may not come back. Meanwhile, income for informal workers – which include a lot of essential workers, like waste pickers, domestic caregivers and agriculture workers – dropped 60% during the first month of the crisis, and up to as much as 81%.