GSP Digest

Redistribution

In 2015, income inequalities reached a historical high in most member countries of the Organization for Economic Cooperation and Development (OECD), according to a study published in December, ‘Income Inequality – The Gap between Rich and Poor’. ¹ In the mid-1980s, the disposable income of the wealthiest 10% of the population in member countries was seven times greater than that of the poorest 10%. Today, that figure is roughly 10 times greater. ² And this trend applies across income groupings. The United Nations Development Programme (UNDP) states that, globally, the richest 10% of the population now earn up to 40% of total global income, while the poorest decile earns between just 2% and 7%. ³

In January 2016, Oxfam International published a report just before this year’s World Economic Forum (WEF) in Davos (20–23 January 2016) entitled ‘An Economy for the 1%’ ⁴ highlighting many of the tactics used by multinational companies and ordinary citizens to dodge taxes. ⁵ According to the report, US$7.6 trillion in private wealth sits offshore in tax havens, depriving countries of an estimated US$190 billion in tax receipts that could be used to bolster social security, health care and educational systems and, in turn, to reduce inequalities. ⁶ The report details an analysis by Oxfam of 200 companies, including WEF strategic partners, and found that 9 out of 10 had a presence in at least one tax haven. Overall, investments in tax havens nearly quadrupled between 2000 and 2014. ⁷

There are also signs that the size of the pie as a whole may also be decreasing. Growth of the global economy stumbled in 2015, coming in at just 2.4%. This represents a downward trend of 0.4 percentage points over previous forecasts presented 6 months ago, as the ‘World Economic Situation Prospects’ of the UN Development Policy and Analysis Division points out. Lower commodity prices, large capital outflows, increased financial market volatility, and the slowing of growth in emerging economies like China, Russia, and Brazil were partly to blame. The study predicts only modest future growth, by 2.9% in 2016, and 3.2% in 2017. ⁸

None of this bodes well for closing the gap between rich and poor countries. In fact, decreasing development aid remains a considerable challenge with regard to the implementation of the Sustainable Development Goals (SDGs). As European donor countries spend aid budgets domestically to tackle the current refugee crisis, development aid for poor countries is drying up. ⁹ Larry Elliot, the economics editor of The Guardian argues that this approach deals ‘with the symptom rather than the cause’. ¹⁰ The Center for Global Development (CGD), meanwhile, shows that ‘only a handful of countries [are] meeting the internationally accepted target of spending 0.7% percent of gross national income on aid’. ¹¹

Not all responses are inward looking, however. As Europe faces its greatest refugee crisis since the Second World War, World Bank Group President Jim Yong Kim declared that, over the next 5 years, to address consequences of civil strife in the region, the World Bank Group will triple its development aid to the Middle East and North Africa (MENA) region to nearly US$20 billion. ¹² Pointing out that more than 2 million refugees from Syria are hosted in the neighboring countries of Jordan, Turkey and Lebanon, Jim Yong Kim promised to support such hosting countries. ¹³ The Global Fund To Fight Aids, Malaria and Tuberculosis, strengthening its partnership with the Organization of Islamic Cooperation, has also extended its aid flow to the MENA region. ¹⁴

Regulation

Over 1 million people made the harrowing journey across the Mediterranean to European shores in 2015, according to the latest Office of the United Nations High Commissioner for Refugees (UNHCR) report updated on 30 December. ¹⁵ In the first 6 weeks of 2016 alone, more than 80,000 refugees arrived in Europe, while another 400 drowned at sea. ¹⁶ Despite the restrictive measures implemented by some states, the number of people who continue to take such a risky journey has risen to 2000 a day.

UNHCR spokesperson Melissa Fleming has declared that additional legal pathways must be opened in order to bring these people out of the shadows and to combat human smuggling. ¹⁷ Similarly, a recent Overseas Development Institute (ODI) report suggests several courses of action for a region-wide solution to the crisis, including the establishment of legal migration channels that make journeys safer and combat smuggling networks, and the creation of a European Union (EU) asylum system that would overhaul the Dublin Regulation, which assigns responsibility for asylum application review to the state through which the asylum seeker first entered the EU. ¹⁸

How to integrate and provide job opportunities for newly arrived refugees in Europe was the subject of a January conference held in Paris by the OECD and UNHCR. ¹⁹ The OECD marked the occasion with the release of a new report entitled ‘Making Integration Work’, which highlights, among other things, the importance of employment opportunities and integration programs in places where refugees are targeted for resettlement. ²⁰

In addition to the focus on refugees, the discussion in the area of global regulation concentrated on the fight against tax avoidance. It has become clear that global company practices are only part of the problem. The varying capacities of national tax authorities and how to allocate taxation rights among jurisdictions also remain important variables to consider. As Owen Barder points out, determining the ‘profits’ to be taxed on the operations of multinational corporations is increasingly difficult as they often incur costs and earn revenues across different countries. While most countries agree taxes must be paid, they diverge on how to calculate and divide the bill. ²¹

Other developments in global tax regulation include the signature of the Multilateral Competent Authority Agreement (MCAA) by 31 countries to facilitate the automatic exchange of country-by-country (CbC) reports. ²² OECD Secretary-General Angel Gurría welcomed the news:

Country-by-country reports are a critical risk assessment tool. By facilitating the exchange of information between tax administrations, these reports provide a timely, single, global picture on the key indicators – profits, tax and economic activities – of multinational businesses. ²³

In January, the European Commission presented its Communication on the Anti-Tax Avoidance Package, designed to prevent aggressive tax planning, increase tax transparency, and create a level playing field for businesses in the EU. ²⁴

But not all were impressed by the scope of propositions featured in that package. The European Network on Debt and Development (Eurodad) suggested the proposal lacked the necessary ambition to truly stem the tide of international tax dodging. Moreover, it said the measures could actually encourage downward tax competition among EU member states to circumvent certain rules. ²⁵

With respect to the evolution of the global trade and investment system, the E15 Initiative brought together experts to generate a 21st century approach to regional trade agreements (RTAs) that further broadens global economic integration. ²⁶ A summary of the proposals was presented during the WEF annual meeting in 2016, ²⁷ including strategies for greater coherence among RTAs such as trade facilitation, customs and data sharing through an interactive website: RTAexchange.org.

Rights

Women’s rights took center stage at the 2016 International Women’s Day, celebrated annually on March 8. This year’s theme was ‘Planet 50–50 by 2030: Step It Up for Gender Equality.’ ²⁸ As part of the celebrations, the official International Women’s Day website asked participants, including global leaders, to make a pledge for global gender parity. ²⁹ This call for parity could appear all the more important, given that the World Economic Forum has suggested that it will take until 2133 to close the gender parity gap. ³⁰ However, some, such as The Guardian’s Women in Leadership site editor Harriet Minter, pointed out that the pledge for parity is essentially ‘toothless’. ³¹ In her view, the pledges are too broad and basic, such as ‘helping all women and girls achieve their ambitions’. Calls for more concrete strategies were echoed at the sixtieth session of the Commission of Status of Women, which took place in New York City from 14–24 March 2016. ³² In particular, women’s groups and organizations hope that governments will outline their strategies for implementation and financing of specific programs that aim to empower women and improve gender equality.

The rights of migrants and refugees have also been brought to the fore, particularly as some European countries seek to close their borders in response to the recent influx of refugees. Ahead of Human Rights Day celebrated annually on 10 December, the UNHCR and the Council of Europe chief urged European countries to respect international agreements and ensure that the human rights of refugees and migrants are protected. ³³ Council of Europe Secretary General Thorbjørn Jagland stated that:

The European Court of Human Rights in Strasbourg has been very clear on this. Our 47 member states have a legal responsibility to guarantee the basic human rights of refugees and migrants, to treat people as individuals and to assess their situation on a case-by-case basis. ³⁴

However, the 7 March statement by EU governments and Heads of State points to the fact that there will be ‘comprehensive, large-scale and fast-track returns to Turkey of all irregular migrants not in need of international protection’. ³⁵ In response to the 7 March statement, Human Rights Watch (HRW) issued a letter to EU leaders pointing out that such provisions do not follow international or EU refugee laws. ³⁶ HRW also suggested that there appeared to be a lack of ‘careful consideration’ in many of the cases.

Other recent crises, such as the spread of the Zika virus, have led to calls for more focus on the right to water and sanitation as well as ensuring equal access for all citizens. Leo Heller, for example, stated that ‘as the world looks for hi-tech solutions to the Zika virus, we should not forget the appalling state of water and sanitation access of the poor, a key underlying determinant of the right to health’. ³⁷ Heller also noted that, while the Latin American region had met the Millennium Development Goal for water in 2010, sanitation remains an issue, as some 3 million people are without access to proper facilities. ³⁸ He highlighted that the new SDGs have much stricter definitions for the water and sanitation goal, which will bring out a more accurate picture of the current situation in these countries. Still, showing that access to water is not only an issue in the developing world, UN experts have called on the United States to address the ‘environmental threats to human rights’, prompted by the recent events in Flint, Michigan where lead-contaminated water primarily impacted poor communities. ³⁹

This framing of environmental threats as a human rights issue suffered a setback at the Paris talks on climate change. In fact, the final draft of the Paris Agreement does not systematically refer to human rights. ⁴⁰ Helen Szoke, the Executive Director of Oxfam Australia, noted that ‘the loss of the human rights language from Article 2 is extremely disappointing and follows the earlier loss of references to gender equality and just transition to a clean economy’. Human rights and ‘just transition’ references were ultimately relegated to the preamble and annex of the Paris Agreement, at the insistence of developed countries such as Britain, Norway, the United States and several others. Meanwhile, developing countries successfully lobbied to keep references to ‘loss and damage’ in Article 8. This section of the text recognizes the very tangible impact of climate change on people’s livelihoods, and calls upon countries to cooperate in areas like the development of early warning systems, disaster preparedness, risk assessment and management, and insurance. However, the Paris Agreement does not provide a basis for liability or compensation, to the dismay of many who sought a clearer recognition of the burden felt by developed countries due to the current state of the world’s environment.

Health

Global health once again figured prominently in the news towards the end of 2015 and the beginning of 2016, this time due to the Zika virus, which is transmitted by a mosquito that also transmits dengue fever. Zika is believed to cause neonatal and neurological disorders, particularly evidenced by an increase in cases of microcephaly in Brazil. The Zika virus had already been observed in French Polynesia in 2013–2014 and was associated with the Guillain-Barré syndrome (GBS).

Having been heavily criticized for its delayed reaction to the Ebola outbreak in 2014–2015, World Health Organization (WHO) Director General Margaret Chan reacted to the concerns in Brazil by convening an Emergency Committee on 1 February 2016. The Committee declared that the growing number of cases of microcephaly and GBS had a direct connection with the Zika virus outbreak and, as such, should be considered a Public Health Emergency of International Concern. ⁴⁹ This means that a number of mechanisms prescribed by the International Health Regulations (IHR), a binding legal instrument for the WHO’s 196 member countries, should apply in the affected countries and territories, namely: Brazil, French Polynesia, El Salvador, Venezuela, Colombia, and Suriname. Some, especially French Polynesia, criticized the lack of reaction by the WHO when concerns were raised during an outbreak that affected the islands more than a year earlier.

But it is not only the actions of the WHO during the outbreak that have come under scrutiny. In early February 2016, Brazil’s legislation also came under fire for hampering efforts to send virus samples abroad in response to the outbreak. ⁵⁰ The country’s health and diplomatic leaders were accused of being responsible for a ‘data gap’ and for hoarding virus samples when larvicide, rather than the Zika virus itself, was falsely believed to be causing the birth defects. ⁵¹ Since then, however, the country has committed to offer more collaboration. The causal relationship between Zika and microcephaly and/or GBS is still being researched but, according to the WHO and initial research results, evidence of such a relationship is increasing. ⁵²

Finally, Zika and the associated new-born ill health issues are having an impact on maternal and reproductive health, especially as the number of unsafe abortions is feared to increase drastically as a result of public scaremongering. ⁵³ Health ministers throughout Latin America have recommended that women in concerned countries not become pregnant and have advocated abstinence. This, however, is viewed as a repetition of the same mistakes committed in the early fight against HIV/AIDS. ⁵⁴ The assumption that women are responsible for ‘getting themselves into a situation’ does not consider the effects of societal poverty and powerlessness challenges, while also constituting a lack of support for individual human rights to health, including access to contraceptives and protection of women’s safety.

As such, the Zika episode points to at least three global health issues: (1) the WHO’s role in global health governance is precarious and its leaders are starting to respond to the criticism it has met over and over again; (2) global health is visible at the level of ‘high politics’ and what is known as global health or ‘disease’ diplomacy (Davies, Kamradt-Scott & Rushton, 2015), with diplomatic pressures being exercised on countries suffering from outbreaks; and (3) hasty policy responses to disease outbreaks may disregard the underlying structural causes of health issues and often tend to tread upon human rights, especially women’s right to health.

Challenges to advancing the human right to health are seen in both emerging and developed economies in pursuit of universal health coverage (UHC). ⁵⁵ The approach taken by Mexico, for instance, was analyzed in an OECD Review published in early 2016. ⁵⁶ It finds that a greater proportion of the Mexican population now have access to health care and that public spending on health has increased overall. However, the report also highlights important shortcomings that need to be addressed, such as excessive out-of-pocket expenses, which are among the highest in the OECD. Similarly, health systems that have served as a model in the past, such as the United Kingdom’s National Health Service (NHS), are suffering from financing schemes tying up resources (e.g. the private finance initiative, PFI) and putting pressure on its workforce, leading to comparatively poorer health outcomes, especially regarding chronic diseases. ⁵⁷

Social protection

Inspired by the success of the ongoing global push for universal health coverage, a similarly ambitious initiative for universal social protection under the SDGs is being jointly advanced by the World Bank and the International Labour Organization (ILO) (see Digest 15.3). Calls for universal programs, rather than those only targeting the poor, are steeped in arguments about enfranchisement and the universal right to social security. But some are now turning to more practical arguments about the effective reach and cost savings of implementing universal social protection schemes.

‘Universal provision is vastly superior in reaching those living in poverty and in reducing both poverty and inequality’, asserted Development Pathways’ Stephen Kidd in a February article. ⁵⁸ This is particularly true in countries with large swaths of poor populations that make up the universal beneficiary pool and those with low administrative capacity to administer a complex and often expensive targeting regime. Advancements in the development of universal social protection in Latin America ⁵⁹ and Mongolia ⁶⁰ were the subjects of webinars hosted by socialprotection.org. The Latin America webinar presented the findings of a report published several months before by the Economic Commission for Latin America and the Caribbean (ECLAC), and once again put forward the argument that ‘where poverty is widespread, the administrative costs and problems frequently associated with targeting can outweigh its benefits’. ⁶¹

Reaching those in particularly hard-to-cover groups, such as own-account and informal-sector workers, remains a considerable hurdle in achieving the social protection components of the 2030 Development Agenda, which calls for the extension of coverage to all. For instance, according to a new report, the ILO found that 60 of the 67 million domestic workers worldwide are excluded from social security coverage. ⁶² Among the barriers cited are the lack of formal employment arrangements between domestic workers and those who employ them, irregular receipt of wages, and a poor public perception of the value of domestic work that has hindered making coverage for this group a priority for policymakers.

The ILO approach to addressing these gaps and others through broad-ranging social dialogue, a hallmark of the organization’s tripartism, was recently codified. The Global Guide for conducting Assessment-based National Dialogues (ABND) for social protection is based on exercises that were facilitated by ILO and UN partners in 14 different countries. ⁶³ The guide describes the ABND exercise as a logical ‘first step towards the implementation of nationally defined social protection floors’. It represents a significant departure from the emphasis on pilot programming in social protection development assistance, and instead focuses on generating broad-based consensus for national strategies to expand social protection across a variety of fronts.

Education

On 4 February 2016, London hosted the Supporting Syria and the Region Conference where UN representatives, donor governments and nations hosting refugees met to address the humanitarian crisis of Syria. ⁶⁴ Weeks before, Gordon Brown, the UN Special Envoy for Education, warned about the consequences of the Syrian conflict for children and youth, and the risk of a lost generation. ⁶⁵ Brown has called for creating, with financial support from government and private donors, extra school places for refugee children by introducing ‘double-shift’ school systems, whereby local students and refugee children in host countries such as Lebanon, Jordan and Turkey make use of school places to attend classes at different times of the day. The call for more resources to support education for refugee children is supported by Malala Yousafzai, who stated that every academic year lost by Syrian children would ‘cost them dearly in terms of lost opportunities for themselves, their families and their country’. ⁶⁶

More than half of the 1.4 million Syrian children living as refugees in neighboring countries are currently out of school. This alarming figure, cited by a coalition of 12 international and local non-governmental organizations (NGOs), has prompted the call for a comprehensive plan to deliver education to conflict-affected children in the region. ⁶⁷ The group is calling for an additional US$1.4 billion to support institutions and teachers inside Syria and in the broader region, and calls upon all parties to ensure the protection of schools against attack.

Meanwhile, at this year’s Davos summit, participants debated how education might address the challenges of a ‘Fourth Industrial Revolution’ which is both technological and social in nature. Vishal Sikka, CEO of Infosys, asked governments to transform education systems ‘to keep pace with developments in technology’ and called for making computers ‘more widely available across all income levels and geographies’. ⁶⁸ Similarly, Asmaa Abu Mezied, a researcher for the online community Internet2, said higher education ought to combine conventional educational environments and the use of Massive Open Online Courses (MOOCs). ⁶⁹ For Mezied, bringing together new and traditional learning environments can make education services more responsive to the needs of global job markets.

The new World Yearbook of Education 2016 focuses on the emergence of the Global Education Industry in both developed and developing countries. ⁷⁰ This latest edition focuses on an increasingly active private sector ‘as providers, test developers, publishers, policy analysts, and consultants’ within public systems. It goes further to examine the role of the private sector in shaping the global education agenda to engender even greater participation from private stakeholders in providing educational services. The Yearbook also looks at how the lucrative business of school improvement, sold by outfits such as Pearson or Teach for All, are eroding much of the public character of education.

Finally, in February 2016, the OECD published a report about low-performing students. ⁷¹ Using PISA data from 2003 to 2012, the report affirms that around one in four 15-year-old students from OECD countries fail to achieve basic skills in reading, mathematics, and science, and that this percentage is even greater in most non-member OECD ‘partner countries’ (Brazil, India, Indonesia, China, and South Africa). The report shows how low performance is related to multiple risk factors, but also how girls and students from immigrant and socioeconomically disadvantaged backgrounds are more likely to lag behind in basic skills. After analyzing the relationship between student socioeconomic background, school characteristics, education policies, and low student performance, the report formulates policy recommendations to tackle low student performance, such as enhancing access to early education, providing remedial support in the initial levels of education, encouraging the involvement of parents and local communities, providing support to disadvantaged schools, and offering special programs to immigrant students.

Food

While estimates suggest that global agricultural production must increase by 70% by 2050 to compensate for population growth and changing tastes for more processed foods, increased food production alone will not be sufficient to end hunger as called for in the SDGs. This is highlighted by the amount of food being wasted, about one third of all food produced. ⁷² According to the UN’s Food and Agriculture Organisation (FAO), recovering just half of this food waste alone could feed the world. In addition, environmental factors such as changes in climate and water scarcity, pose an increasing threat to food security.

The 2015–2016 El Niño phase, one of the strongest on record, has triggered severe weather events such as droughts and floods, which have left nearly 100 million people in southern Africa, Asia, and Latin America facing both water and food shortages. ⁷³ A recent joint statement issued by FAO and the Famine Early Warning Systems Network set up by United States Agency for International Development (USAID), states that El Niño will have a particularly devastating effect on southern Africa’s harvests and food security in 2016, due to the driest rainfall season in the last 35 years. ⁷⁴ Over the coming year, food insecurity levels and food insecure population numbers in the region are expected to be at their highest levels since the 2002–2003 food crisis. In Central America, El Niño conditions have led to a second consecutive year of drought. According to United Nations Office for the Coordination of Humanitarian Affairs (UN-OCHA), this is one of the region’s most severe droughts on record, and is predicted to grow in intensity through March 2016. ⁷⁵

While insufficient rains since March 2015 in these regions represent the main threat to food production, El Niño has caused heavy rains, flooding, and extremely hot or cold weather in others. Heavy rains expected from El Niño in Peru, Ecuador, Paraguay and southern Brazil may not only increase the spread of the Zika virus, but could also lead to animal disease outbreaks (including zoonosis and food-borne diseases), plant pests, and forest fires. According to FAO, these factors may further increase food insecurity. ⁷⁶ Despite the expected decline in strength over the coming months, El Niño and a possible subsequent La Niña event will continue to affect different parts of the world at different times with a mix of above- or below-average rainfall. ⁷⁷ Continued below-average rainfall and high temperatures are likely to persist in southern Africa well into 2016, with the food crisis lasting into 2017. Yet the impacts on farming and livelihoods, and thus food insecurity, could potentially exceed 2 years due to failed harvests and prolonged flooding.

Rising food prices may continue to contribute to a global food crisis, as El Niño is expected to further disrupt commodity prices and cause overall turbulence in global commodity markets throughout 2016. ⁷⁸ In addition, the weather disturbances come as conflict and persecution are driving the number of people forced to flee their homes to a record of more than 60 million worldwide. ⁷⁹

Not only severe weather events, but also more permanent changes in climate, will disproportionately affect the poorest countries and particular segments of their population. A recent study by a team of US biologists found that rising global temperatures are pushing key species of fish toward the planet’s North and South poles, robbing traditionally poorer countries closer to the equator of a critical food source for millions of people. ⁸⁰ These migration patterns of fish are likely to exacerbate inequality between the world’s poor and rich, as they affect access to crucial natural resources.

Global food security is further threatened by scarcity of the most crucial natural resource: water. About 28% of the world’s agriculture currently lies in water-stressed regions, with agriculture accounting for 70% of overall freshwater withdrawals. Recently, a study investigated for the first time the worldwide potential to produce more food with the same amount of water by optimizing rain use and irrigation. It suggests that this potential has previously been underestimated ⁸¹ and that improved agricultural water management could not only increase crop yields to provide half the calories needed to eradicate hunger by 2050, but also mitigate some of the harmful climate change effects on food output. Investing in crop water management, which is not explicitly mentioned in the SDGs, could substantially reduce hunger, even when population growth is taken into account.

In order to end hunger, food systems will need to be more resilient to shocks that can limit supply and drive up prices. ⁸² Increases in food availability, beyond raising incomes, will then also need to be translated into better nutrition.

Habitat, land, housing

According to the World Bank, the global urban population is growing by some 75 million people every year. ⁸³ On one hand, urbanization holds incredible potential for raising living standards, while on the other, concerns about pollution, urban sprawl, and the creation of slums remain important issues to be addressed. These challenges were discussed at the third annual Urbanization and Poverty Reduction Research Conference held by the World Bank in February 2016. ⁸⁴ Participants, such as New York University Professor Paul Romer, noted that ‘planning for urban expansion is the most important priority in economic development’. Urban planning was also a focus during the National Urban Policy Week meetings held in South Korea in December 2015. ⁸⁵ The aim of this conference was for policymakers to learn from their peers and to share their own experiences. These events and a series of other discussions are building up to the Habitat III UN Conference on Housing and Sustainable Urban Development, to be held in Ecuador from 17–20 October 2016. ⁸⁶

Another issue that is relevant to more sustainable development is access to water and sanitation. UN Secretary-General Ban Ki Moon and World Bank President Jim Yong Kim have announced the launch of a new high-level panel to ensure action on the water and sanitation-related targets of SDG 6. ⁸⁷ Still, while both leaders noted the centrality of water for other areas of sustainable development, more concrete action and financing is needed. According to a World Bank study on prospects for achieving SDG 6, there will also need to be greater spending on sanitation. ⁸⁸ The latter is certainly important, as some 2.4 billion people lacked access to improved sanitation in 2015. ⁸⁹