Continued Inaction Despite G20 Report on Worsening Inequality

Jomo Kwame Sundaram

Although inequality among countries still accounts for a far greater share of global income disparities than national-level inequalities, discussions continue to focus primarily on the latter.

South African Initiative

The G20 Extraordinary Committee of Independent Experts on Global Inequality, chaired by Nobel laureate Joseph Stiglitz, was commissioned by South Africa’s 2025 G20 presidency. South Africa and Brazil, the previous host, have long had the world’s highest national-level inequalities. However, their current governments have led progressive initiatives for the Global South.

Although the US is due to assume the G20 presidency next year, President Trump did not participate in this year’s summit, citing concerns including alleged SA oppression of its White minority.

Inequality growing faster

The G20 report uses various measures to highlight the widening gap between rich and poor. National-level inequality is widespread: 83% of countries, representing 90% of the world’s population, have high Gini coefficients above 40%.

While global income inequality remains very high, with a Gini coefficient of 61%, it has declined slightly since 2000, primarily due to China’s economic growth. Meanwhile, wealth concentration continues to rise. Wealth inequality exceeds income inequality, with the richest 10% owning 74% of the world’s assets. The average wealth of the richest 1% grew by $1.3 million since 2000, accounting for 41% of new wealth by 2024. Private wealth has risen sharply while public assets have declined.

Beyond income and wealth, the report reviews inequalities in health, education, employment, housing, environmental vulnerability, and political voice. Many inequalities intersect, with class, gender, ethnicity, and geography compounding disadvantages. The promise of equal opportunity is rarely meaningful, as most people have limited social mobility.

Harmful effects

The G20 report condemns extreme inequality for its economic, political, and social consequences. Low incomes typically mean hunger, poor nutrition, and limited healthcare. Economies underperform and fail to realise their potential. Inequality influences resource allocation, benefiting the rich at the expense of working populations.

Natural resources often enrich owners while undermining environmental sustainability and social well-being. Economic inequality also involves political disparities, as the wealthy can buy influence. Policies frequently favour the rich, undermining both national and global economic performance. High inequality also erodes public trust and threatens economic and political stability, especially in the West.

Drivers of inequality

Public policy can influence how income is initially distributed and how taxes and transfers redistribute wealth. Market income depends on asset distribution, finance, skills, and social networks. Recent inequality rises are linked to weakened equalising policies and stronger disequilibrating forces, including inherited wealth.

Economic policies over recent decades have favoured the wealthy by weakening labour, deregulating markets, and restricting trade unions. Tax systems have become less progressive, and fiscal austerity has worsened conditions for vulnerable populations. Financial deregulation has caused crises that often favour the influential, while privatisation of public services has benefited the well-connected at the public’s expense.

International governance

Global economic institutions have also contributed to inequality. Trade and capital mobility have lowered wages, increased income disparities, and weakened workers’ bargaining power. Financial liberalisation benefits wealthy creditors and exacerbates sovereign debt crises.

International inequalities have cross-border effects, including environmental and health impacts. Overconsumption and greenhouse gas emissions by the rich worsen climate change. Stronger intellectual property protections and profit-oriented policies have increased health disparities, while tax agreements allow the wealthy to pay less than poorer nations. Oxfam reported that the top 1% in the Global North drained the Global South at a rate of $30 million per hour.

Inaction despite consensus

The report highlights a growing analytical consensus: inequality hinders economic progress, and reducing it benefits the economy. Inequality reflects policy, moral choices, and economic trade-offs. While combating it is both feasible and desirable, there is little evidence that the G20, IMF, or OECD are making serious efforts to reduce inequalities, particularly between countries in the Global North and South.