Some of the world’s poorest countries are making strides in reducing the gap between rich and poor, according to an index of inequality devised by Oxfam. Namibia and Uruguay are among a clutch of developing-world countries to reduce inequality through a wide range of measures, including social spending and progressive taxation.
Oxfam said the efforts of some poorer countries contrasted with the policies of wealthier developing world nations such as India and Nigeria, which have either failed to tackle inequality or allowed it to worsen.
The reducing Inequality index, compiled with Development Finance International, moves away from a simple calculation that compares the wages and incomes of the richest 10% and the poorest 10%. It gives prominent rankings to government spending on welfare and social protection and health, taxation policies, and labour rights and minimum wage policies.
Denmark, which often scores well in assessments of wellbeing and social cohesion, ranks as the least unequal nation, followed by Germany, Finland and Austria.
The UK ranks 14th behind Slovenia and Australia and above Croatia and Italy, despite Oxfam saying it ranked 99th for its tax system. The charity said: “A combination of high VAT, not very progressive personal income tax, and the low corporate tax rate of 19% [were behind the poor rating].”
Namibia almost matched its much richer neighbour after achieving a ranking of 32 to South Africa’s 31. Oxfam said Namibia was starting to enact a wide range of policies including progressive taxation and higher spending on schools and hospitals, though it said it started from a low base and inequality remained significant.
Oxfam said: “Its commitment has been recognised by Nobel prize-winning economist Joseph Stiglitz and others and, although inequality remains very high, it no longer ranks as the world’s most unequal country.”
Matthew Martin, Development Finance International’s director, said: “What’s most striking is how clearly the index shows us that combatting inequality isn’t about being the wealthiest country or the one with the biggest economy. It’s about having the political will to pass and to put into practice the policies that will narrow the gap between the ultra-rich and the poor.”
Oxfam said Namibia gained high marks after the first version of the index was published last year and it increased the minimum wage “substantially” and implemented policies to reduce inequality.
Singapore, which ranks 149 in the index, went in the other direction, increasing the basic rate of tax by 2% but keeping the top rate at 22%, while Mongolia ended universal child benefit payments as part of a broader austerity programme.
Oxfam described India’s health, education and welfare spending as “woefully low” and said a progressive tax system was undermined by widespread avoidance.
Nigeria claimed the bottom spot, ranking 157th. Oxfam said the oil-rich nation had failed to tackle a child mortality rate that still sees one in 10 children die before their fifth birthday. Labour rights violations are commonplace and the rich often avoid tax.
The Netherlands was ranked high on measures of progressive taxation and social protection but fell to 17th after Oxfam marked it down for its lack of effort in tackling tax avoidance.
Some countries that have gone in a more conservative, populist direction have torn up much of their welfare state and increased inequality, said Oxfam. It named Argentina as one country that has heaped the burden of its financial rescue on the poorest.