Helen Clark: Launch of UNDP Report, “Humanity Divided: Confronting Inequality in Developing Countries”

29 Jan 2014

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Speech for Helen Clark, UNDP Administrator
at the Launch of UNDP Report, “Humanity Divided: Confronting Inequality in Developing Countries”
New York, Millennium Hotel, Diplomat Ballroom
Wed. 29 January 2014, 11am

I am pleased to launch this important new UNDP Report, “Humanity Divided: Confronting Inequality in Developing Countries”.

The Report argues that great and persistent inequality in the midst of plenty is a paradox of our times. Over the last few decades, poverty rates have declined in every region of the world; emerging market countries have grown with unprecedented speed; and life-changing technologies have improved well-being. Even so, many people, and in some cases entire countries, continue to be shut out of the gains. 

The richest eight per cent of the world’s population earns half of the world’s total income, while the remaining 92 per cent of people are left with the other half.  Last week, Oxfam released a report estimating that the share of global wealth owned by the world’s 85 wealthiest people is roughly that owned by the poorest 3.5 billion. That leaves a tiny fraction for the world’s poorest people. Indeed, the share of global wealth controlled by the world’s poorest thirty per cent fell from just 1.5 per cent in 1988 to one and a quarter (1.25) per cent in 2008.

Many of those sharing that tiny sliver of global wealth face multiple layers of deprivation and disadvantage - restricting people’s options and capabilities, and trapping them in poverty. Not only do 1.2 billion people continue to live on under US$1.25 dollars a day, but inequalities in income and wealth are often compounded by inequalities in access to power, and disparities in health and education.

At the global level, in developing countries as a whole, 

•    Women in rural areas remain three times more likely to die in child birth than those in urban areas;
•    Persons with disabilities are up to five times more likely than those without to incur catastrophic health expenditures; and,
•    Children born in poorer households are less likely to complete their primary education, with the most striking difference seen in South Asia, where children in the wealthiest quartile are two times more likely to complete primary school than those in the lowest.

Inequalities on today’s levels are unjust in both developing and developed countries and between these groupings; and, as demonstrated in this “Humanity Divided” Report, they also impede human progress. The Report explores the causes and consequences of the inequalities which divide us – within and between countries – and argues that there is nothing inevitable about high levels of inequality. It aims to inform ongoing conversations within communities, countries, and at the global level on the challenges of inequality, and to equip policy-makers and development actors with policy options for reducing it.

Curbing Inequalities: Growing demand for action

Concern about the level of inequality in our world was reflected in the contributions of the 1.75 million people who have shared their priorities on the post-2015 global development agenda. In the UN-facilitated consultations, people have conveyed a clear sense that our world is deeply unfair, and that the dynamics of power and exclusion have left many people, groups, communities, and even whole countries behind. They recognized that without concerted effort, this privilege and disadvantage would continue through generations, and called on governments to act on inequalities.

In a survey conducted for the Report we are releasing today, 79 per cent of policy-makers in fifteen developing countries described income inequality as a ‘high’ or ‘very high’ priority. Most agreed that inequality represented a potential threat to their country’s long-term social and economic development. 

The potential for instability and setbacks if inequalities are not reduced is increasingly recognized by world leaders, and is also preoccupying many of those who are well off, including in global business circles. Ahead of last week’s meetings in Davos, the World Economic Forum issued a report identifying widening income disparities as the second greatest worldwide risk, and warning that inequality is ‘threatening security on a global scale.’

This new UNDP Report is therefore very timely. My comments today will first address how inequalities impact on well-being, and then discuss policies which can reduce inequalities and advance human development.

1)    How inequalities impact on well-being

The “Humanity Divided” Report looks at inequalities through a human development lens – arguing that there are multiple ways in which inequalities negatively impact the well-being of people and the prospects of society as a whole.

A 2011 UNDP report noted that: “the persistence of inequality at high levels in many developing economies has made it more difficult to reduce poverty”.  The Report being launched today reviews the literature and empirical evidence, showing that inequality reduces economic growth and “leads to less poverty reduction at a given level of growth”.

Indeed, the World Bank has noted that “no country has managed to transition beyond a middle-income status while maintaining high levels of inequality”.

At the same time, evidence suggests that where economic power is heavily concentrated in the hands of a few, political power may also be entrenched in the hands of elites with undue influence.  This then creates structural barriers to the promotion of greater equality; for example, through regressive taxation or under-investment in public goods and infrastructure such as education or public health systems and services.

High inequalities may also be associated with high crime rates and political unrest. The resulting risk-levels may then distort public spending towards security measures and away from those essential for human development progress. 

2.    Policies to address inequalities

A number of countries have managed to reduce gaps in human well-being significantly. They have shown how with resolute leadership and citizen action, sufficient political space can be generated to make change possible.

Drawing on evidence and analysis of the trends in and drivers of inequality, this Report calls for a policy framework which systematically and comprehensively addresses inequalities, focusing on moderating income inequality; closing gaps in health, nutrition, and education; and tackling the prejudices and stereotypes which reinforce discrimination and marginalisation.

The Report argues that development policy should be concerned with both inequality of outcomes and inequality of opportunity as they are often interlinked and mutually reinforcing. It advocates for:

a)    a shift towards more inclusive growth patterns;
b)    prioritising public expenditure on the universal provision of social services and on social protection; and
c)    broadening civic engagement in the interest of reducing political and social exclusion. 

Allow me to briefly discuss each.

A.    Inclusive Growth

In highly unequal countries, economic growth can amount to little more than a ‘winner takes all’ windfall for the richest people. To change that, national growth policies cannot solely focus on increasing the speed of economic growth or only on redistribution. And inequality cannot be addressed solely by social policies: inclusive, job-rich growth is needed.

Inclusive growth policies strive to raise the incomes of low-income households faster than the average rise. That requires policies and strategies aimed specifically at generating growth in the localities where poor, excluded, and marginalized people live, and in the sectors in which they work.

As the poor are disproportionately represented in small- and medium-sized enterprises which, as a whole, account for more than two thirds of employment in developing countries, the Report calls for a particular focus on such businesses. For example, measures which enable small-holder farmers, including women farmers, to be more productive and competitive by expanding access to finance and to secure land tenure, as well as investments in rural infrastructure and adequate agricultural extension support, can reduce inequalities between rural and urban areas.

Labour market rules which include effective minimum wage policies and collective bargaining are also important. Increases in minimum wages and unionization played an important role in reducing income inequality in a number of Latin American countries in the 2000s – alongside the adoption of innovative and universal social protection systems. 

Employment guarantee schemes have also been effectively used to reduce inequality, such as India’s Mahatma Gandhi National Rural Employment Guarantee Act in which 49 per cent of participants are women.

B.    Public expenditure on the provision of basic services

The Report documents high rates of inequality in the non-income dimensions of well-being – such as health, nutrition, and education – despite improvements in national averages of progress in these areas. It calls for increasing public expenditure on basic services, with the aim of achieving universal provisioning, coupled with a particular emphasis on the groups currently experiencing the greatest disadvantages.

The persistence of unequal outcomes for specific groups – whether they be women, ethnic minorities, indigenous peoples, people with disabilities, gay, lesbian, bisexual, and transgender people, people living with HIV, and others who are marginalized – suggests a need to tackle prejudice, stereotypes, norms, and laws which fuel discrimination, and to empower groups which have been consistently socially and politically excluded.

Emphasis must also be placed on the quality of services. To improve that, including in health and education, and to ensure universal access, efficient, capable, and responsive public administrations are required. 

C.    Civic Engagement

Where inequalities have been significantly reduced, open dialogue and civic engagement have played an important role.

To enable that, freedom of association and expression, and access to information, are important. Social audits, participatory planning, citizen report cards, and public expenditure reviews can be used to build trust between government and people and drive inequality-reducing policies.

Attention also needs to be paid to overcoming the specific barriers which prevent poor and marginalized people from participating in public life.

Conclusion

In closing, let me emphasize that while my remarks have focused on reasons to be concerned about inequality because of its impact on human development progress, inequalities also matter intrinsically because they run contrary to what people consider fair for themselves and others.

The first few lines of the UN Charter emphasize the determination of the United Nations to “reaffirm the dignity and worth of the human person and the equal rights of men and women and of nations large and small”. 

Equality was also highlighted as a fundamental value in the United Nations Millennium Declaration in 2000, when world leaders acknowledged that: “in addition to our separate responsibilities to our individual societies, we have a collective responsibility to uphold the principles of human dignity, equality and equity at the global level.” The Millennium Development Goals, however, did not explicitly focus on inequality, and the way in which progress on them has been reported has tended to mask disparities.  This was a significant issue in the global consultations – marginalized groups felt invisible when national averages were reported – knowing that as groups their situation was not revealed.

Thus, there was a call for better data, and for it to be disaggregated so that inequalities linked to wealth, gender, ethnicity, and other factors could be explicitly targeted in the post-2015 agenda and sustainable development goals. 

Through this Report and through our work around the world, UNDP is committed to working with countries on addressing inequalities, and in sharing, including through South-South and Triangular Cooperation, the successful experiences of a number of countries in reducing them. 

Leadership

Helen Clark became the Administrator of the United Nations Development Programme in 2009, and is the first woman to lead the organization. She is also the Chair of the United Nations Development Group.

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