Stemming the rise of inequality in economic growth: social cohesion depends on it
World Economic Forum (WEF), Davos, blog series
Nadia Saracini , Senior Inequalities Advisor for Asia and the Middle East, Christian Aid
The theme of this year’s World Economic Forum Annual Meeting, Creating a Shared Future in a Fractured World, seems very relevant to the situation faced by many of the communities Christian Aid works with around the world.
This is particularly true for those living in countries that have achieved, or are about to achieve, ‘middle income’ status yet remain home to very significant proportions for the world’s poor, and are affected by deep social inequalities.
In these contexts, economic prosperity is not necessarily bringing about greater social cohesion, and even with the best of intentions states often struggle to deliver rights and entitlements to all in the face of growing elite capture.
In our experience working with people living in poverty in South Asia, the tendency of economic growth to widen income inequality can also exacerbate structural inequalities, such as those resulting from caste hierarchy and ethnic divisions.
Indigenous peoples, Dalits and migrants living in poverty are among the most socially excluded groups for whom the benefits of economic prosperity are not only unequally shared, but also often accumulated at their expense.
Social inequalities and discrimination
One aspect of this is that socially excluded groups are routinely forced to sell their labour on very unfavourable terms. ‘Who they are’ often determines the work they are expected to do, and social inequalities are also often amplified and exploited within the workplace.
They also often can’t access social safety nets that might give them more options, therefore they face a lifetime of disadvantage and discrimination that presents multiple barriers to their social or labour-market mobility.
As a result, many individuals are effectively slaves in a system that does not benefit them, while their labour contributes to value chains which link them to some of the most prosperous businesses in the world, many of which will be represented at Davos.
As part of the ‘informal’ economy, their work may go uncounted, but their contributions to wealth creation and growth are huge.
The most invisible and powerless among them are often women, who face very specific intersecting barriers and are least likely to find themselves in a position to organise and protect their rights.
To address rising inequality we need responses that are specifically ‘pro-poor’.
Closing the gap
To be truly inclusive, economies need to not only to provide decent employment for the most marginalised groups, but also generate resources to finance measures that decrease the different dimensions of inequality they face.
This means going beyond addressing income disparities (though wealth redistribution is needed) to funding interventions that close the gaps (between women and men, and between socially excluded groups and the wider population) in terms of access to education, social protection, respect, rights and power.
To address rising inequality we need responses that are specifically ‘pro-poor’.
This could include affirmative action in employment and provision of services and social protection that meet the needs of migrants from vulnerable populations.
Responses also need to recognise rights and secure access to economic assets for socially excluded groups, and particularly strengthen land tenure and allow access to forest resources for indigenous people.
Growth alone is not going to address structural inequalities and build social cohesion — much more needs to be done to address discriminatory norms and practices that show few signs of dying out in modern economies.
Read in more posts from our World Economic Forum blog series
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