LIMA – One percent of Latin America’s population will be richer than the rest 99 percent in 2022 if the current pace of growth in inequality is maintained, warned non-profit Oxfam in a report.
The report “Privileges that Deny Rights” was released in Lima on Wednesday and says that currently the richest one percent of Latin Americans control 41 percent of the region’s wealth, while others share 59 percent.
Economist and report author Rosa Cañete told EFE the study is aimed to urge Latin American governments to evaluate the extreme concentration of wealth in few hands in their countries.
“From 2002 to 2015, the fortunes of LAC’s billionaires grew at an average annual pace of 21 percent, a growth rate six times higher than the entire region’s GDP growth (3.5 percent per year),” the report says.
“It means that only a handful of people are capturing the region’s growth, which is bad for everyone, including the richest, because their companies won’t be able to sell more,” Cañete explained.
The study also revealed Latin Americans, with at least $30 million, have a per capita income 4,800 times greater than the bottom one fifth of the economic ladder.
This shoots up to 16,460 times in Honduras and 12,197 in Nicaragua, while the countries with the lowest difference are Venezuela (1,012) and Uruguay (1,018).
Cañete said Latin America continues to be a region of great inequality, despite a reduction in those living below the poverty line from 44 percent to 28 percent during 2002-12.
More than a quarter of the region’s 165 million-strong population continued to be poor in 2013, with 69 million indigent, according to the report, which warns the inequality could go up further unless comprehensive policies for employment and taxation are adopted in the face of the region’s economic deceleration.
“Without such policies, we will have 200 million people at risk of re-entering the region’s poverty statistics,” Cañete warned.
This vulnerable group fell off the poverty figures after their daily earnings rose to $4-$10, while the region’s GDP grew at an average of 6 percent between 2002 and 2012.
“However, they are threatening to fall below the $4 threshold as the necessary policies to have public services for education and quality health have not been developed during this time, which could have protected these people from the external economic shocks,” Cañete added.
Peruvian economist and researcher Armando Mendoza pointed out that 40 percent of his country’s population, about 12 million, falls within this vulnerable bracket.
Rosa Cañete said the taxation policy in Latin America “is an absolutely wasted instrument of reducing inequality, contributing, in many cases to aggravate and sharpen it,” citing the case of Dominican Republic, where the State has stopped collecting $700 million annually owing to tax exemptions.
“We appeal for the development of such policies as to obtain greater resources from the haves to invest it in public policies to guarantee the rights of all,” she concluded.
The Oxfam report comes a few days before the Peruvian capital plays host to annual meetings of the board of governors of the International Monetary Fund and the World Bank, from Oct. 5-12.