Worldwide pandemic fuels income inequality
Globally, the income-equity gap has widened further since Covid-19 started. A report by Swiss bank UBS found that billionaires increased their wealth by more than a quarter (27.5%) at the height of the Covid-19 crisis from April to July 2020, just as millions of people around the world lost their jobs or were struggling to get by on government schemes.
In 2021, the world’s richest have the greatest concentration of wealth since the turn of the century US Gilded Age, when families such as the Carnegies, Rockefellers and Vanderbilts controlled vast fortunes.
The report found that billionaires had mostly benefited from betting on the recovery of global stock markets during the global lockdowns in March and April, when they were at their lowest.
UBS’s Josef Stadler explained that billionaires had the backing to survive the downturn and then “the stomach” to buy more company shares when equity markets around the world were crashing – so they gained both as the market went down and then back up. He said that billionaires typically have “significant risk appetite” and were confident to gamble some of their vast fortunes.
Additionally, shares in many technology companies (often owned by billionaires) have risen sharply as the pandemic required more and more of their services. A good example is Amazon, owned by the world’s richest person Jeff Bezos, whose wealth has increased by $74 billion dollars during the crisis.
UK Thinktank The High Pay Centre focuses on top incomes, corporate governance, and business performance. The Centre is generally critical of existing top-pay practices, and advocates policies designed to reduce economic inequality. Executive Director Luke Hilyard said the current “extreme wealth concentration is an ugly phenomenon from a moral perspective, but it’s also economically and socially destructive”.
Despite this, UBS said 209 billionaires quickly donated a total equivalent to $7.2bn of disaster relief from March to June 2020, to help fight against Covid-19 and the financial impact of lockdowns on families. Much of these funds were given in the unusual form of unrestricted grants, which allow grantees to decide how best to use funds.
Also researching the income-equity gap, Famine relief charity Oxfam interviewed 295 economists globally. They reported that the majority predict the Covid-19 pandemic will ultimately further increase income inequality in their countries. Like the UBS report, Oxfam also noted that 1000 of the world’s richest people recouped their losses within 9 months.
Oxfam also reported that like their counterparts overseas, 31 Australian billionaires increased their fortunes by almost $85 billion during the pandemic. This in a time where hundreds of thousands of Australians lost their jobs and then their JobSeekeer/Keeper payments, ‘leaving 1.4million Australians living on as little as $51 per day’ Oxfam Chief Executive Lyn Morgain said.