Reduce inequality within and among countries

The COVID-19 crisis has exacerbated global income inequality, partly reversing the decline of the previous two decades. Weak recoveries in emerging markets and developing economies are expected to raise between-country inequality. Globally, the absolute number of refugees in 2021 was the highest on record. The war in Ukraine is creating one of the largest refugee crises of modern times.

Prior to the outbreak of the COVID-19 pandemic, more than three fifths of countries with available data saw higher growth in household expenditure or income per capita among the bottom 40 per cent of the population than the national average. The pandemic is threatening to reverse this trend. In 2020 many countries saw declines in growth among the bottom 40 per cent of greater magnitude than the national average.

Banks’ profitability weakened in 2020 mostly because of the COVID-19 pandemic, although reported asset quality remained good. Based on financial soundness indicators data for 2015–2020, the fraction of countries reporting return on assets above 1.0 per cent declined to 48 per cent in 2020 from 72 per cent in 2019 and the median return on assets declined from 1.5 per cent to 1.0 per cent.

The International Organization for Migration Missing Migrants Project recorded 5,895 deaths on migratory routes worldwide in 2021, a number surpassing pre-pandemic figures and making 2021 the deadliest year on record for migrants since 2017.

By mid-2021, the number of people who were forced to flee their countries owing to war, conflict, persecution, human rights violations or events causing serious disturbances of public order had grown to 24.5 million, the highest absolute number on record. For every 100,000 people, 311 are refugees outside their country of origin, an increase from 216 in 2015. In addition, as at 12 April 2022, about 4.7 million refugees from Ukraine had crossed borders into neighbouring countries.

Globally, in 2021, 62.3 per cent of 138 countries with data reported having a wide range of policies to facilitate orderly, safe, regular and responsible migration and mobility of people, meaning that they had policy measures for 80 per cent or more of the 30 subcategories under the six domains of the indicator.

The proportions of tariff lines applied to imports admitted duty-free from least developed countries, small island developing States and developing countries have remained relatively stable in recent years, at around 64.5 per cent, 65 per cent and 51 per cent, respectively.

The global average cost of sending $200 decreased from 9.3 per cent of the amount sent in 2011 to 7.42 per cent in 2016 and to 6.3 per cent in 2021, getting closer to the international target of 5 per cent.

Source: Progress Towards Sustainable Development Goals- Report of the Secretary-General 

For more information, please, check: https://unstats.un.org/sdgs/report/2022/

Before the pandemic, modest gains had been made in the reduction of inequality in certain areas, for example, reducing income inequality in some countries and territories, continuing preferential trade status for lower-income countries and territories and decreasing transaction costs for remittances. However, inequality persists, whether in relation to income, wealth, opportunity or other dimensions. The pandemic is exacerbating existing inequalities within and among countries and territories and hitting the most vulnerable people and the poorest countries and territories hardest, and is likely to delay the progress of the poorest countries and territories on the Goals by a full 10 years. Globally, the number of refugees reached its highest level on record in 2020. Even with strict COVID-19-related restrictions on mobility around the world, thousands of migrants died on their migratory journey.

According to estimates of the International Monetary Fund, the COVID-19 pandemic would increase the average Gini index for emerging market and developing economies by more than 6 per cent, with an even larger impact predicted for lowincome countries and territories.

Data from 44 countries and territories for the period 2014–2020 show that almost one in five people reported having personally experienced discrimination on at least one of the grounds prohibited under international human rights law. Moreover, women were more likely to be victims of discrimination than men. The health and socioeconomic situations of many groups already experiencing higher levels of discrimination have been further affected by the pandemic.

The data from 2019 on financial soundness indicators indicated some improvement of overall loan performance, while the levels of capital, which is the main buffer for absorbing losses, remained high despite a slight decline. The share of countries and territories reporting non-performing loans whose value exceeds 5 per cent of total loans declined from 41.9 per cent in 2018 to 39.5 per cent in 2019. Meanwhile, the share of countries and territories reporting a ratio of total regulatory capital to risk weighted assets of more than 15 per cent declined from 84.6 per cent in 2018 to 82.1 per cent in 2019, although the median rose from 17.9 per cent to 18.2 per cent over the same period.

In 2020, 4,186 deaths and disappearances were recorded along migratory routes worldwide, with an increase in fatalities on some routes. Despite the pandemic and mobility restrictions at borders across the world, tens of thousands of people continued to leave their homes and embark on dangerous journeys across deserts and seas.

By mid-2020, the number of people who had fled their countries and territories and become refugees owing to war, conflict, persecution, human rights violations and events seriously disturbing public order had grown to 24 million, the highest number on record. The number of refugees outside their country of origin has risen to 307 out of every 100,000 persons, more than double the figure at the end of 2010.

Globally, in 2019, 54 per cent of the 111 Governments with data reported having instituted a comprehensive set of policy measures to facilitate orderly, safe, regular and responsible migration and mobility of people, which means that they have reported having policy measures in place for at least 80 per cent of the subcategories that make up the six policy domains of this indicator. The degree to which the policy measures were reported, however, varies widely across policy domains, with most countries and territories reporting measures for cooperation and partnerships and for safe, orderly and regular migration, and fewest countries and territories reporting measures for migrant rights and for socioeconomic well-being.

From 2017 to 2020, the proportion of products exported by the least developed countries and developing countries that receive duty-free treatment has remained unchanged at 66 and 52 per cent, respectively.

In 2019, total resource flows for development to developing countries from Development Assistance Committee donors, multilateral agencies and other key providers amounted to $400 billion, of which $164 billion was ODA.

The average global cost of sending a $200 remittance decreased from 9.3 per cent in 2011 to 6.5 per cent in 2020, bringing it closer to the international target of 5 per cent. The average annual decrease was 0.31 percentage points.

Source: Progress towards the Sustainable Development Goals – E/2021/58

Notwithstanding positive signs of reducing inequality in some dimensions, such as a reduction of relative income inequality in some countries and preferential trade status benefiting lower-income countries, inequality still persists in all forms. The COVID-19 crisis is hitting the poorest and most vulnerable people and countries the hardest and threatens to have a particularly damaging impact on the poorest countries. It is exposing the profound inequalities that exist within and among countries and is exacerbating those inequalities.

In 73 of the 90 countries with comparable data during the period 2012–2017, the bottom 40 per cent of the population saw its incomes grow. Moreover, in slightly more than half of those countries, the bottom 40 per cent experienced a growth rate in income that was higher than the overall national average. Still, in all countries with data, the bottom 40 per cent of the population received less than 25 per cent of the overall income or consumption, while the top 10 per cent received at least 20 per cent of the income.

Data from 31 countries over the period 2014–2019 show that one in five persons reported having personally experienced discrimination on at least one ground of discrimination prohibited by international human rights law. The pandemic risks exacerbating those patterns.

Of the 111 countries with available data as at September 2019, 54 per cent reported having a wide range of policy measures to facilitate the orderly, safe, regular and responsible migration and mobility of people. Central and Southern Asia (80 per cent) and Latin America and the Caribbean (79 per cent) reported having the highest share of countries with such policies, compared with only 33 per cent of the countries in Oceania and Northern Africa and Western Asia.

The proportion of products exported by least developed countries, developing regions and small island developing States that could enter international markets free of duty increased, from 66 to 67.4 per cent, 51.1 to 52.1 per cent and 65.4 to 66.5 per cent, respectively, from 2017 to 2018.

In 2018, total resource flows for development to developing countries from Development Assistance Committee donors, multilateral agencies and other key providers were $271 billion, of which $166 billion were ODA.

Source: Progress towards the Sustainable Development Goals, Report of the Secretary-General, https://undocs.org/en/E/2020/57

Inequality within and among nations continues to be a significant concern despite progress in and efforts at narrowing disparities of opportunity, income and power. Income inequality continues to rise in many parts of the world, even as the bottom 40 per cent of the population in many countries has experienced positive growth rates. Greater emphasis will need to be placed on reducing inequalities in income as well as those based on other factors. Additional efforts are needed to increase zero-tariff access for exports from least developed countries and developing countries, and assistance to least developed countries and small island developing States.

• In more than half of the 92 countries with comparable data during the period 2011–2016, the bottom 40 per cent of the population experienced a growth rate that was higher than the overall national average. However, the bottom 40 per cent received less than 25 per cent of the overall income or consumption. In many places, the increasing share of income going to the top 1 per cent of earners is of significant concern.
• Robust and sound financial systems are essential for supporting equal access to financial services. High loan asset impairment, measured by the ratio of non-performing loans to total loans for deposit takers, is a potential risk to the soundness of the banking system. For almost half of the 138 reporting countries, the percentage of non-performing loans to total loans was less than 5, while the average median for the period 2010–2017 was 4.3 per cent.
• While countries in developing regions represent over 70 per cent of the membership of the General Assembly and World Trade Organization, which utilize a one member, one vote system, their voting share in other international organizations remains far below these levels. Governance reforms are being negotiated at the International Monetary Fund, and changes were adopted at the World Bank in October 2018. However, full implementation will leave developing countries with just over 40 per cent of the voting rights, still short of the 75 per cent they represent in World Bank membership in terms of the number of countries.
• Duty-free access continued to increase for least developed countries, small island developing States and developing regions at large. More than 50 per cent of exports from developing countries are now eligible for duty-free treatment. The increase of duty-free access in world markets was the largest for least developed countries, namely in the industrial and agricultural sector.
• In 2017, total receipts by developing countries from donors of the Development Assistance Committee of the Organization for Economic Cooperation and Development, multilateral agencies and other key providers were $414 billion, of which $163 billion were ODA. Total ODA to small island developing States from all donors was $4.3 billion in 2017, a decrease of 33 per cent in real terms over 2016, due to exceptional debt relief operations for Cuba in 2016.

Source: Report of the Secretary-General, Special edition: progress towards the Sustainable Development Goals

Efforts have been made in some countries to reduce income inequality, increase zero-tariff access for exports from LDCs and developing countries, and provide additional assistance to LDCs and small island developing States (SIDS). However, progress will need to accelerate to reduce growing disparities within and among countries.

• Between 2010 and 2016, in 60 out of 94 countries with data, the incomes of the poorest 40 per cent of the population grew faster than those of the entire population.
• In 2016, over 64.4 per cent of products exported by LDCs to world markets and 64.1 per cent of those from SIDS faced zero tariffs, an increase of 20 per cent since 2010. Developing countries overall had duty-free market access for about 50 per cent of all products exported in 2016.
• In 2016, receipts by developing countries from member countries of the Development Assistance Committee of the OECD, multilateral agencies and other key providers totalled $315 billion; of this amount, $158 billion was ODA. In 2016, total ODA to LDCs and SIDS from all donors totalled $43.1 billion and $6.2 billion, respectively.
• Based on provisional data, among the $613 billion in total remittances recorded in 2017, $466 billion went to low- and middle-income countries. While the global average cost of sending money has gradually declined in recent years, it was estimated at 7.2 per cent in 2017, more than double the target transaction cost of 3 per cent.

Source: Report of the Secretary-General, The Sustainable Development Goals Report 2018

Progress in reducing inequality within and among countries has been mixed.

• The voices of developing countries still need to be strengthened in decisio n-making forums of international economic and financial institutions. Moreover, while remittances can be a lifeline for families and communities of international migrant workers in their countries of origin, the high cost of transferring money continues to reduce such benefits.
• From 2008 to 2013, the per capita income or consumption of the poorest 40 per cent of the population improved more rapidly than the national average in 49 of 83 countries (accounting for three quarters of the world’s population) with data.
• The International Monetary Fund, through its recent quota reform, has increased the share of developing countries’ vote (defined as countries in developing regions, according to the M49 classification) to 37 per cent in 2016, up from 33 per cent in 2010. That increase is still short of the 74 per cent they represent in the membership. While the World Bank reforms of 2010 are still being implemented, that effort has not changed the 38 per cent share of voting rights at the International Bank for Reconstruction and Development that developing countries have held since 2000.
• Duty-free treatment and favourable access conditions for exports from least developed and developing countries have expanded. From 2005 to 2015, the proportion of tariff lines globally with duty-free treatment for products that originate in developing countries increased from 41 per cent to 50 per cent; for products that originate in the least developed countries, the proportion rose from 49 per cent to 65 per cent.
• The least developed countries and small island developing States continue to require additional assistance to ensure that they share in the benefits of sustainable development. In 2015, total resource flows to the least developed countries and small island developing States amounted to $48 billion and $6 billion, respectively. Eight donor countries met the target of 0.15 per cent of gross national income (GNI) for ODA to the least developed countries.
• The benefits of remittance from international migrant workers are reduced somewhat by the generally high cost of transfer. On average, post offices and money transfer operators charge over 6 per cent of the amount remitted; commercial banks charge 11 per cent. Both are significantly above the 3 per cent target. New and improved technologies, such as prepaid cards and mobile operators, result in lower fees for sending money home (between 2 per cent and 4 per cent), but are not yet widely available or used for many remittance corridors.

Source: Report of the Secretary-General, "Progress towards the Sustainable Development Goals", E/2017/66

• Goal 10 calls for reducing inequalities in income as well as those based on age, sex, disability, race, ethnicity, origin, religion or economic or other status within a country. The Goal also addresses inequalities among countries, including those related to representation, migration and development assistance.
• Target 10.1 seeks to ensure that income growth among the poorest 40 per cent of the population in every country is more rapid than its national average. This was true in 56 of 94 countries with data available from 2007 to 2012. However, this does not necessarily imply greater prosperity, since nine of those countries experienced negative growth rates over that period.
• The labour share of GDP, which represents the proportion of wages and social protection transfers in an economy, provides an aggregate measure of primary income inequality. A shift of income away from labour towards capital has contributed to rising inequality. Globally, the labour share of GDP decreased from 57 per cent in 2000 to 55 per cent in 2015, mainly owing to stagnating wages and a decline in employers’ social contributions in developed regions, while the trend was stable or slightly upward in developing regions.
• Preferential treatment for developing countries and the least developed countries in trade can help reduce inequalities by creating more export opportunities. Major developed country markets already offer duty-free market access to the least developed countries on most of their tariff lines. But even when they do not, as in the case of some agricultural products, the average applied tariff rate is often close to zero per cent. The share of exports from the least developed countries and developing regions that benefitted from duty-free treatment increased from 2000 to 2014, reaching 79 per cent for developing countries and 84 per cent for the least developed countries. The comparative advantage of the least developed countries in duty-free access varies depending on the product groups analysed. Almost all agricultural products from the least developed countries (98 per cent) were exempt from duties by developed countries, versus 74 per cent of products from developing countries. Shares of exports exempt from duties diverged even more for textiles and clothing: the rate for both product groups for the least developed countries was around 70 per cent, while for developing countries it was 41 per cent for textiles and 34 per cent for clothing.
• Official development assistance and financial flows contribute to reducing inequalities within and among countries. In 2014, total resource flows for development to the least developed countries totalled $55.2 billion, and eight donor countries met the target of 0.15 per cent of gross national income (GNI) for ODA to the least developed countries. Preliminary ODA figures for 2015 show that bilateral net ODA to the least developed countries increased by 4 per cent in real terms, compared to 2014.
• People migrate for many reasons, including better employment opportunities and higher wages. When successful, many migrants send money back to their country of origin to care of family members. Remittances to developing countries have increased slightly, rising to $431.6 billion in 2015, up 0.4 per cent from 2014. In contrast, global remittances (including those to developed countries) were estimated at $582 billion in 2015, a decline of 1.7 per cent from 2014. Even with the global contraction in remittance flows in 2015, the longer term trend is upward. However, the cost of sending money across national borders is significant, averaging 7.5 per cent of the amount remitted in 2015, down from 10 per cent in 2008 but still above the 3 per cent called for in target 10.c.

Source: Report of the Secretary-General, "Progress towards the Sustainable Development Goals", E/2016/75