SDIS21: Fairer Economies - What are the challenges in making economies more sustainable?

After decades of progress towards addressing poverty, life expectancy and income inequality, COVID-19 set us back – bringing the first rise in extreme poverty in a generation, At the same time, the pandemic increased hunger, food insecurity and unemployment, while life expectancy dropped, including in some of the world's wealthiest countries.

However, these trends started even before the pandemic, with 650 million people going hungry, 2 billion suffering from food insecurity and the rate of reduction in poverty slowing.

Both permanent and temporary social protection programs helped to fill the gaps, but they weren’t enough: only 46.9% of the global population was effectively covered by at least one social protection cash benefit in 2020, “leaving as many as 4 billion people without a social safety net,” says the UN's Sustainable Development Goal Report 2021.

Amid this context, the Forum is convening its virtual Sustainable Development Impact Summit 2021 on 20-23 September.

Recovery is underway – for some. "It took just nine months for the fortunes of the top 1,000 billionaires to return to their pre-pandemic highs, while for the world's poorest, recovery could take more than a decade," according to Oxfam. Meanwhile, as of August 2021, just over 1% of people in low-income countries have been vaccinated, compared to 51% in high-income countries – which not only illustrates the reality of inequality but also puts everyone, rich and poor, at risk.

Inequality has widespread effects: “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,” Forum Founder and Executive Chairman Klaus Schwab explained in the Global Social Mobility Index 2020.

And climate change and its disproportionate impact on the world’s most vulnerable threaten to make it worse. “Disasters and their immediate impacts threaten to reverse development gains and slow poverty reduction and hunger alleviation,” explains the UN's progress report. If we don’t take action on climate, expect the divides to deepen – especially when it comes to things like clean air and clean water, nutritious food and health risks.

SDG 1: No Poverty. By 2030, eliminating extreme poverty and reducing the number of people in poverty. 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. 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, achieve and sustain income growth of the bottom 40% of the population at a rate higher than the national average. This 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.

In recent years, we had made significant progress towards making economies fairer. The share of the world’s population living in extreme poverty fell from 10.1% in 2015 to 9.3% in 2017, while workers living in poverty halved from 2010 to 2019. Income inequality was falling. But COVID-19 has taken us backwards.

“Estimates suggest that 2020 saw an increase of between 119 million and 124 million global poor, of whom 60% are in Southern Asia,” explains the UN SDG progress report 2021. In fact, extreme poverty increased for the first time since 1998, from 8.4% in 2019 to 9.5% in 2020.

Unless drastic action is taken, we’ll miss the target of ending poverty by 2030.

Other targets have been dramatically hit by the pandemic, too. The equivalent of 255 million full-time jobs were lost – four times the number lost during the 2007-2009 financial crisis. Compared to 2019, as many as 161 million more people faced hunger and 320 million more faced moderate or severe food insecurity, while an estimated 15% more children suffered from wasting. Young people and women were especially hard hit, seeing unemployment rates of 8.7% and 5%, respectively, compared to 3.7% for all adults and 3.9% for men.

Now, the climate threat looms – with a potentially greater impact than the pandemic.

As of April 2021, 118 countries reported national and/or local disaster risk reduction strategies, up from 45 in 2015.

However, direct "economic losses of $70.4 billion due to disasters were reported by 53 countries for 2019, of which 60% ($42.5 billion) were recorded in the agricultural sector,” explains the progress report. If the extreme weather events of the past year are any indication, we can expect the cost of this risk – and its impact on inequality and food security – to rise if we don’t take drastic action to stop climate change.