A first-of-its-kind index by Oxfam International reveals that governments worldwide exacerbated "an explosion of economic inequality" during the first two years of the COVID-19 pandemic, highlighting various global policy failings.
The deep dive into the national budgets of 161 nations found the “overwhelming majority” of countries cut spending on health, education, and social protection. Over 140 countries froze the tax rate for their richest citizens, while two-thirds refused to increase minimum wages.
"Our index shows that most governments have completely failed to take the steps needed to counter the inequality explosion created by COVID-19,” Oxfam International’s Executive Director Gabriela Bucher said in a statement. “They ripped away public services when people needed them most and instead left billionaires and big corporations off the hook to reap record profits.”
Below, we explore the most inequality-inducing policy decisions made by governments and the international community over the past two years.
Read on to learn more about the biggest takeaways from the report, and why exposing and understanding current failings is critical to achieving a more equitable world.
1. Counties Failed to Tax Wealthy People
Ninety percent of analyzed governments did not increase taxes for their wealthiest people. Shockingly, 11 countries lowered tax rates, with just seven choosing to raise taxes on rich people to "help society weather [the] pandemic and its economic impact."
2. Governments Allowed Tax Havens
Another inequality exacerbator seen by countless nations revolved around dodgy tax policies — specifically, where governments allow the wealthiest people and large corporations to circumvent taxes and stash away billions of dollars. According to Oxfam, these critical funds should rightly form part of a nation's revenue and could be used to help pay for education and health care for vulnerable citizens.
3. Nations Limited Health and Education Access
The decision by countries worldwide to limit spending on public services meant the only people able to access education and health care were those who could afford to pay for it. Free health and education increase the disposable income of all people, according to Oxfam, but benefit the poorest people most.
"When ordinary people are charged for education and health care, it means people die, and kids don't go to school, driving up suffering and inequality," the report explained.
Half of all low- and lower-middle-income countries cut spending on health between 2020 and 2022. Palestine is a notable exception, increasing its health budget's share by a third, social protection by more than half, and education by one-tenth.
Senegal likewise increased its education budget by one-fifth and social protection by a third.
4. Global Failures to Protect Ordinary Citizens
Another major cause of inequality stems from a lack of universal protections. According to the report, without pensions, child support grants, or unemployment benefits, the working poor, children, people living with disabilities, unemployed people, unpaid carers, and other vulnerable groups are left to face hardships on their own.
"While high-income countries were able to deploy fiscal support amounting to 9.3% of gross domestic product (GDP), low-income countries and emerging economies were only able to mobilize 1.6% and 3.5% of their GDP respectively,” the report said. “Naturally, this massive disparity has translated into an inequality in the recovery paths.”
Fiji, Mexico, Samoa, and Tunisia have uniquely outstanding pension coverage.
5. Debt Repayments Trumped Public Services
In 2021, lower-income nations spent 27.5% of their federal budgets repaying debts — an average of twice that spent on education, four times that of health, and nearly 12 times that of social protection.
"For every dollar spent on health, developing countries pay four dollars in debt repayments to rich creditors. Comprehensive debt relief and higher taxes on the rich are essential to allow them to reduce inequality dramatically," Mathew Martin, the director of research partner Development Finance International, said in a statement.
6. Lack of Worker Rights and Unlivable Wages
According to the report, countries worldwide failed to protect workers' rights and ensure living wages. Two-thirds of nations failed to raise the minimum wage in line with economic growth, despite soaring poverty levels and decades-high living costs.
Notably, the Maldives has been applauded for introducing its first national minimum wage.
7. Gender Inequality Continues to Drive Inequality
Lastly, the report cites workplace sexism — including unequal pay, lack of parental leave, and limited policies against sexual harassment — as key drivers of inequality. However, the primary issue, according to the data, is not that nations do not have laws pertaining to these issues. In fact, 154 countries have laws on non-discrimination and 145 on equal pay. Instead, the priority area for improvement is the enforcement of the rules.
Afghanistan is highlighted as a nation that has seen almost all legal protections for women collapse.
Barbados, however, was emphasized for making significant improvements in women's labor rights.
The index's top and bottom ranking of governments — categorized by the extent to which they are taking steps to reduce inequality — can be seen below. Nations are examined across social spending, taxation, and labor, with each pillar analyzed by policy commitments, the coverage and implementation of these commitments, and their overall impact on inequality.
Top 10 Countries Committed to Reducing Inequality
Bottom 10 Countries Committed to Reducing Inequality