SDG 10: Reduced Inequalities
Today we are zooming in on SDG 10, which aims to reduce inequality. The statistic I shared at the beginning comes from Oxfam’s “Survival of the Richest” report and shows that the top 1% of the global population has double the income of the bottom 99 percent. That report also includes a number of shocking statistics including the fact that the world’s billionaires’ fortunes increase by $2.7 billion a day or that Elon Musk paid a “true tax rate” of about 3 percent between 2014 and 2018.
SDG 10 is made up of 7 targets and three means of implementation that focus on reducing inequality within and among countries by closing wealth gaps, reducing inequalities and discrimination, enhancing social protections, and ensuring sound regulation of financial markets.
For much of the 1900s, the biggest challenge we faced when it came to inequality was the disparity between countries. In other words, that developing nations were much worse off than developed nations. However, the gap between these countries has been narrowing over the last 25 years, this is not to say that there are no countries left behind just that overall there has been an improvement thanks to economic growth in countries like China and India. But as we saw progress between countries, a new challenge has emerged which is that inequality has grown substantially within countries, meaning among the individuals living in countries. This has been particularly true since the financial crisis in 2008. Today 71 percent of the world’s population lives in a country where inequality has grown. Or put in even more simple terms income and wealth are increasingly concentrated at the top. An Oxfam report shows that in the 10 years since the financial crisis, the number of billionaires has nearly doubled. In addition, the fortunes held by these billionaires are just getting bigger. In 2018, the 26 richest people in the world held as much wealth as half of the global population (the 3.8 billion poorest people), down from 43 people the year before. We are going to dive into more of the specifics around this goal but I think it is really important to remember that this is the reality of the overall trend we see when it comes to inequality (United Nations).
Target 10.1
By 2030, progressively achieve and sustain income growth of the bottom 40 percent of the population at a rate higher than the national average.
What it means
The idea here is that to close the wealth gap, lower-income people need wage growth faster than the income growth of other groups. Everyone, especially those with lower income or living in poverty, must benefit and participate in a country’s broader economic growth. This is a core tenet of the Leave No One Behind principle that is fundamental to the SDGs (UN Stats).
This target is measured by an indicator that examines the growth rates of household expenditure or income per capita among the bottom 40 percent of the population and the total population.
Where we are currently
Before COVID-19 there was promising progress on this target. More than three-fifths of countries with available data saw the bottom 40% of income or household expenditures growing more quickly than the national average, suggesting that income inequality was narrowing. However, the pandemic led to a stall and potentially even a reversal of this trend. In 2020 many countries saw declines in growth among the bottom 40 percent of greater magnitude than the national average. (UN ECOSOC)
Regardless of positive or negative trends on the trajectory, in all countries with data, the bottom 40 percent of the population received less than 25 per cent of the overall income, while the richest 10 per cent received at least 20 percent of total income (UN Stats).
Target 10.2
By 2030, empower and promote the social, economic and political inclusion of all, irrespective of age, sex, disability, race, ethnicity, origin, religion or economic or other status.
What it means
This target is measured by the proportion of the population living on less than half the national median income. This measurement aims to show the level of social exclusion, relative poverty, and inequality of income distribution within a country. (UN Stats) For those of you who watched my video on SDG 1 - No Poverty, you will remember that there is a difference between absolute poverty where you set a poverty line and determine how many people are below it, and relative poverty where poverty is measured in relation to the incomes of others. This target is trying to assess inclusion so it measures how people are doing in relation to each other and not in absolute terms.
Where we are currently
So where do we stand on this one? Well, globally, 13 percent of people live on less than half the national median income. However, this average number hides wide variations between different countries and regions. For example, this number is less than 5 percent in Kazakhstan and Kyrgyzstan but is around 25 percent in Brazil and South Africa. Latin America has the greatest proportion of people living below 50 percent of the national median income and Central and Southern Asia has the smallest disparity. It may surprise some to know that Europe and North America are actually not high performers on this indicator and actually come in the middle of the pack. (UN Stats)
Target 10.3
Ensure equal opportunity and reduce inequalities of outcome, including by eliminating discriminatory laws, policies, and practices and promoting appropriate legislation, policies, and action in this regard.
What it means
To understand this target there are a few terms that are important to know. Equal opportunity is the right to be treated without discrimination. Discrimination is any distinction, exclusion, restriction, preference, or other differential treatment that is directly or indirectly based on a factor that is prohibited by international human rights law which includes race, colour, sex, language, religion, political or other opinions, national origin, social origin, property, birth status, disability, age, nationality, marital and family status, sexual orientation, gender identity, health status, place of residence, economic and social situation, pregnancy, indigenous status, or afro-descent (UN Stats). And finally, harassment, which encompasses words, gestures, or actions, which tend to annoy, alarm, abuse, demean, intimidate, belittle, humiliate, or embarrass another or create an intimidating, hostile, or offensive environment. While they generally involve a pattern of behaviour, harassment can take the form of a single incident as well. (UN Stats)
This target is measured by the proportion of the adult population who self-report that they personally experienced discrimination or harassment during the last 12 months based on ground(s) prohibited by international human rights law, which was that long list I just read. (UN Stats)
Where we are currently
Roughly one in five people have experienced discrimination, according to data from 49 countries collected between 2017 and 2021. (UN Stats) Women are more than twice as likely as men to experience discrimination on the grounds of sex. People with disabilities experience a much higher rate of discrimination than the general population with one-third reporting personal experiences of discrimination. (UN Stats)
The last thing I want to mention on this target is that there is a big focus on policies and laws within its text and this is because the policy has the potential to both reduce and exacerbate discrimination. Many countries have laws that prohibit employers from making hiring decisions on the basis of grounds prohibited under international human rights law and this promotes fairer approaches to employee recruitment or retention. Whereas policies like the anti-gay bill recently adopted in Uganda which can mean life imprisonment for those who identify as gay propagate and exacerbate discrimination against marginalized groups. Horrific.
Target 10.4
Adopt policies, especially fiscal, wage, and social protection policies, and progressively achieve greater equality.
What it means
This particular target is measured by two indicators that are largely considered the most credible ways of looking at inequality on a statistical level.
The first one is called the Labour Share of GDP. And effectively, it compares how much of the overall economic benefit of the economy goes to workers as opposed to the capital holders which effectively means the companies and the people or institutions who own them. It helps to understand if more economic output will actually lead to better living conditions for workers. A decreasing Labour Share of GDP means more inequality because there is less economic benefit going to workers the lower the percentage gets, for example from 2014 to 2019 the labour share fell from 54.1 per cent to 52.6 per cent which means that in 2014 54.1 per cent of benefit was going to workers and in 2019 only 52.6 percent was. (UN Stats)
The second technical measure of inequality is called the Gini index. It is a commonly used measure of inequality that shows the statistical dispersion in the distribution of income over a population. A Gini Index of zero expresses perfect equality: that is, every individual in the population has the exact same income. A Gini Index of 100 expresses that is, all income accrues to a single individual, and all other individuals have zero income. Now of course neither of those scenarios is possible or desirable but it helps us to see the structure of inequality in a given country. (UN Stats)
Where we are currently
Globally, Labour Share of GDP is declining, which remember is a bad thing, but it’s actually quite a complex picture if we zoom in. Europe and North America make up a large percentage of overall global income and their Labour Share has been declining which is skewing global statistical trends. There are actually several regions where Labour Share is improving including sub-Saharan Africa, Latin America and the Caribbean, and Eastern and South-Eastern Asia. However, even those these regions are improving they are starting from quite a low number, and Europe and North America still have higher overall Labour Share than these regions even if the trend is declining.
On the Gini index levels of income inequality remain high in many countries. Out of 166 countries with data, 65 have a Gini index value of over 40, with 17 having an index value greater than 50. The lowest levels of income inequality were seen in Slovenia and the Czech Republic, with Gini index values below 25.
Target 10.5
Improve the regulation and monitoring of global financial markets and institutions and strengthen the implementation of such regulations.
What it means
The idea here is that we want a strong and sound financial system because if there are large vulnerabilities it can lead to big shocks like the 2008 financial crisis. The International Monetary Fund or the IMF has come up with a list of financial soundness indicators that show strengths and vulnerabilities in a country’s financial system, while there are over 50 indicators looked at by the IMF, only 7 are considered in target 10.5:
Regulatory Tier 1 capital to assets: It is a measure of leverage indicating the extent to which assets are funded by other than own funds.
Regulatory Tier 1 capital to risk-weighted assets: It is calculated using regulatory Tier 1 capital as the numerator and risk-weighted assets as the denominator.
Nonperforming loans net of provisions to capital : This FSI is a capital adequacy ratio and is an important indicator of the capacity of bank capital to withstand losses from NPLs that are not covered by specific provisions for NPLs.
Nonperforming loans to total gross loans: This FSI is often used as a proxy for asset quality and is intended to identify problems with asset quality in the loan portfolio.
Return on assets: It is an indicator of bank profitability and is intended to measure deposit takers’ efficiency in using their assets.
Liquid assets to short-term liabilities: It is a liquidity ratio and is intended to capture the liquidity mismatch of assets and liabilities and provides an indication of the extent to which deposit takers can meet the short-term withdrawal of funds without facing liquidity problems.
Net open position in foreign exchange to capital: This FSI is an indicator of sensitivity to market risk, which is intended to gauge deposit takers’ exposure to exchange rate risk compared with capital. It measures the mismatch of foreign currency asset and liability positions to assess the vulnerability to exchange rate movements.
Where we are currently
Generally, since 2008 a number of reforms to the financial system globally have strengthened its ability to respond to shocks. Banks’ profitability weakened in 2020 mostly because of COVID-19, although reported asset quality remained good. Despite a few worrying cases like SVB in the US and Credit Suisse in Switzerland, generally financial systems are providing well with most of the soundness indicators remaining stable or improving slightly year over year. (UN Stats)
Target 10.6
Ensure enhanced representation and voice for developing countries in decision-making in global international economic and financial institutions in order to deliver more effective, credible, accountable, and legitimate institutions.
What it means
This one is another that is quite self-explanatory. It advocates for a stronger voice for developing countries in the decision bodies of international organizations, with the idea being that developing countries are best placed to make the case for policies and decisions that are meant to benefit them.
The indicator has two separate components: the developing country proportion of voting rights and the developing country proportion of membership in international organizations. In some institutions, these two components are identical. source The indicator is calculated independently for eleven different international institutions: The United Nations General Assembly, the United Nations Security Council, the United Nations Economic and Social Council, the International Monetary Fund, the International Bank for Reconstruction and Development, the International Finance Corporation, the African Development Bank, the Asian Development Bank, theInter-American Development Bank, the World Trade Organisation, and the Financial Stability Board. (UN Stats)
Where we are currently
The proportion of developing countries present in these institutions has remained pretty much unchanged since 2000. The UN Security Council has the largest percentage at 6.67%, of course, this is because it is the smallest body, and the lowest percentage is the UN General Assembly which has 0.518% and that is because it has full representation of all countries. Here is a link to an interactive chart if you want to play with the data further. (UK Government)
Target 10.7
Facilitate orderly, safe, regular and responsible migration and mobility of people, including through the implementation of planned and well-managed migration policies.
What it means
Labour mobility and migration are realities in today’s world but it can often be very difficult for migrants to integrate into society due to a variety of reasons and barriers. A migrant is a person who moves away from his or her place of usual residence, whether within a country or across an international border, temporarily or permanently, and for a variety of reasons. I want to be clear that this includes people who move for opportunity as well as those who are forced to move to escape a dangerous situation, which are refugees.
This target is measured by four indicators. One looks at the recruitment cost that an employee must pay to get hired. This is addressing the problem that low-skilled labour migrants often pay fees to obtain contracts and complete recruitment formalities. This is against international conventions that require employers to pay all of the costs associated with the recruitment of foreign workers. The second indicator is the number of countries with migration policies that facilitate orderly, safe, regular and responsible migration and mobility of people. The third indicator is the number of people who died or disappeared in the process of migration towards an international destination. This one is a little tough to think about but the reality is thousands of people put themselves at risk to move away from danger and toward greater opportunity. The fourth indicator is the proportion of the population who are refugees, by country of origin.
Where we are currently
For the indicator related to recruitment cost, collection of data on this only recently began and therefore is not solid enough to report at a global level but a spotlight was shone on this issue during the World Cup this year when information was released about Qatar’s practices in hiring foreign labour, which are also common practices in other countries in the Middle East. Many workers pay between 1 and 9 months of their earnings to pay recruitment costs.
For the indicator related to policies, Globally, 54 percent of countries have a comprehensive set of policy measures to facilitate orderly, safe, regular, and responsible migration and mobility of people, based on 111 countries with available data in September 2019. (UN Stats)
For the indicator related to migrant deaths, in 2021 5,895 people died fleeing their countries. This surpasses pre-pandemic figures and makes 2021 the deadliest year on record for migrants since 2017, according to the IOM. The majority of migration-related fatalities or about 3400 occurred on maritime and land routes to and through Europe. (UN Stats)
For the indicator about the proportion of refugees, we see these numbers continue to climb. By mid-2021, the number of people forced to flee their countries due to war, conflict, persecution, human rights violations, and events seriously disturbing public order had grown to 24.5 million, the highest absolute number on record. For every 100,000 people worldwide, 311 are refugees outside their country of origin. This is a 44 percent rise since 2015. In absolute terms, countries in Northern Africa and Western Asia were the largest regional source of refugees with approximately 8.4 million, followed by countries in sub-Saharan Africa with 6.7 million, and Latin America and the Caribbean with 4.5 million. The ongoing war in Ukraine has created the worst refugee crisis in recent history. As of May 2022, the movement of more than 6 million people from Ukraine to other countries has been registered, the majority of whom are women and children. In addition, at least 8 million people have been displaced inside the country to escape the conflict. source
Means of Implementation
Target 10A - Implement the principle of special and differential treatment for developing countries, in particular least developed countries, in accordance with World Trade Organization agreements
Target 10B - Encourage official development assistance and financial flows, including foreign direct investment, to States where the need is greatest, in particular, least developed countries, African countries, small island developing States, and landlocked developing countries, in accordance with their national plans and programmes
Target 10C - By 2030, reduce to less than 3 percent the transaction costs of migrant remittances and eliminate remittance corridors with costs higher than 5 percent.
Keep Learning
Here are a few great resources for further reading and learning:
Goal 10 Overview (2023, United Nations)
SDG Tracker (2023, Our World in Data)
UNRISD (2023, United Nations)
Survival of the Richest (2023, Oxfam)
Stanford Center on Poverty & Inequality (2023, Stanford)