Beyond income, beyond averages, beyond today: Inequalities in human development in the 21st century

December 10, 2019

Commentary by Steliana Nedera

UNDP Resident Representative

in Bosnia and Herzegovina

On 9th December the United Nations Development Programme launched the 2019 edition of its signature global report - the Human Development Report (HDR). This year’s edition is special in two ways: it includes the 2019 Multidimensional Poverty Index, developed by UNDP with University of Oxford, and it contributes new approaches to understanding and tackling inequality – the subject of SDG 10 (Reduced Inequalities). The inequalities in human development are a roadblock to achieving the 2030 Agenda for Sustainable Development. They are not just about disparities in income and wealth. They cannot be accounted for simply by using summary measures of inequality that focus on a single dimension. And they will shape the prospects of people that may live to see the 22nd century. Thus, exploring inequalities has to go beyond income, beyond averages and beyond today.

Beyond income

Income and wealth inequalities are often translated into political inequality, in part because inequalities depress political participation, giving more space to particular interest groups to shape decisions in their favour. The privileged may capture the system, moulding it to fit their preferences, potentially leading to even more inequalities. Power asymmetries can even lead to breakdowns in institutional functions, weakening the effectiveness of policies. When institutions are captured by the wealthy, citizens are less willing to be part of social contracts. When that translates into lower compliance with paying taxes, it diminishes the state’s ability to provide quality public services. That can in turn lead to greater inequalities in health and education. When the governing system is perceived as unfair, possibly due to systematic exclusions or clientelism, people tend to withdraw from political processes, amplifying the influence of elites.

Persistent inequalities can undermine both socio-political stability and democratic rule. This is apparent in survey data for this region showing extensive public concern with the quality of governance, particularly in the perception of corruption and inequality before the law. These concerns about the quality of governance, together with high levels of informal and vulnerable employment, gaps in social protection, outmigration of skilled and young workers make inequality issues particularly pressing in the region.

Beyond average

Bosnia and Herzegovina is according to the Gini coefficient of distribution of income across the population in the mid-range for the Western Balkans. But let’s look at a less abstract way to understand inequality in BiH: trend of income distribution over time. In 1984 the bottom 50% of the population received about 29% of national income, while the top 10% received about 23%.  Between 1984 and 2004, these proportions were totally reversed:  the bottom 50% had fallen to 23%, while the share of the top 10% had risen to 32%. While the effect of taxation reduced the gap after 2005, it does nothing to reverse the radical shift in income from the bottom half of the population to the top.

In BiH today, roughly 18% of the population live below the poverty line (60% of the median income) and 30% experience precarity, living above the poverty line, but at risk of falling below it.

People do not perceive a Gini coefficient, what they experience is a sense of their place, dignity, and value in society and in the ways in which they were able to live, interact and look toward the future for themselves and their children. An inclusive society is one in which education, health care, meaningful employment, social services, contact and care for those who are at risk or in need are equally available, accessible and welcoming to all.  The dramatic post-war shift in income distribution and radical increase in inequality has affected every sector of BiH society, aggravating new and old prejudices, tensions, and divisions that all combined become an important factor in driving people out of BIH. If continued this would undoubtedly further impede the country’s overall progress.   

In each sector – health care, education, employment and social protection – we find patterns of inequality between men and women, between urban and rural residents, among regions and cantons, between majority and minority ethnic groups.  While the social insurance and social welfare systems, like the tax system, can mitigate the impact of inequality, they are not large enough or comprehensive enough or themselves equally funded enough to counter the social, political and economic effects of a massive distribution of resources away from half of society.

Beyond today

Much analysis focuses on the past or on the here and now. But a changing world requires considering what will shape inequality in the future. Two seismic shifts will shape the 21st century: climate change and technological transformations. The climate crisis is already hitting the poorest hardest, while technological advances such as machine learning and artificial intelligence can leave behind entire groups of people, even countries—creating the spectre of an uncertain future under these shifts.

To sum up, the inequality is not a one-dimensional phenomenon, hence addressing it takes a holistic and concerted effort of all concerned, both the government and its institutions as well as the proactive citizens. “As the world changes, so do the inequalities that matter,” says Pedro Conceição, HDRO Director. “The good news is that they are not inevitable. Every society has a choice about the level and kind of inequality it is prepared to tolerate.”

In the forthcoming National Human Development Report on Social Inclusion in BiH which will be launched in early 2020, we look at the structural dynamics of inclusion in BiH society, identify gaps and offer targeted policies for addressing the inequities and shortcomings we have identified.