Lesson 8 Poverty and Inequality

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Lesson 8 Poverty and Inequality

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Erica Atendido

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Poverty and Inequality

Module 8
CHAPTER 8- Poverty and Inequality

In the first semester of 2018, a family of five needed no less

than Php 7,337.00 on average, to meet the family’s basic food
needs for a month. This amount is the food threshold. On the
other hand, no less than Php 10,481.00 on average, was needed
to meet both basic food and non-food needs of a family of four
in a month. This amount is the poverty threshold.
POVERTY – deprivation of those
things that determine the quality of life
including food, clothing, shelter and safe
drinking water but also such intangibles as
the opportunity to learn and enjoy the respect
of fellow citizens.
FOOD THRESHOLD - requirements set by the Food and
Nutrition Research Institute include the minimum income required to
meet basic food needs, and satisfying the nutritional (FNRI) to ensure
that one remains economically and socially productive.

POVERTY THRESHOLD - is the minimum income required

to meet the basic food and non-food needs such as clothing, fuel, light
and water, housing, rental of occupied dwelling units, transportation,
communication, health and education expenses, non-durable
furnishing, household operations and personal care and effects.
TWO MAIN TYPES OF
ECONOMIC
a. WEALTH INEQUALITY – measures how a small
group of people in the world own most of the world’s
stuff. This stuff can be everything from homes and cars to
financial assets and shares in businesses. People can be
‘wealthier’ without necessarily increasing their income, for
instance by owning assets like buying a share of a business
or owning a house.
Wealth – refers to the net worth of a
country. It takes into account that all the
assets of a nation may be natural,
physical, and human - less the liabilities.
It is the abundance of resources in a
specific country.
b. INCOME INEQUALITY – it looks at how big
the differences in what people get paid are in the
economy. Over the last few decades, income
inequality within countries has been rising. The top
earners are earning more and more, while average
earners are seeing their wages stagnating or rising
at a lower rate.
RISING INEQUALITY AFFECTING MORE THAN TWO-THIRDS OF
THE GLOBE, BUT
IT’S NOT INEVITABLE: NEW UN REPORT

The World Social Report 2020, published by the UN Department of Economic

and Social Affairs (DESA), shows that income inequality has increased in most
developed countries, and some middle-income countries - including China,
which has the world’s fastest-growing economy. The challenges are underscored
by UN chief António Guterres in the foreword, in which he states that the world
is confronting “the harsh realities of a deeply unequal global landscape”, in
which economic woes, inequalities and job insecurity have led to mass protests
in both developed and developing countries. “Income disparities and a lack of
opportunities”, he writes, “are creating a vicious cycle of inequality, frustration
and discontent across generations.”
‘THE ONE PERCENT’ WINNERS TAKE (ALMOST) ALL
The study shows that the richest one percent of the population are the big
winners in the changing global economy, increasing their share of income
between 1990 and 2015, while at the other end of the scale, the bottom 40
percent earned less than a quarter of income in all countries surveyed. One of the
consequences of inequality within societies, notes the report, is slower economic
growth. In unequal societies, with wide disparities in areas such as health care
and education, people are more likely to remain trapped in poverty, across
several generations. Between countries, the difference in average incomes is
reducing, with China and other Asian nations driving growth in the global
economy. Nevertheless, there are still stark differences between the richest and
poorest countries and regions: the average income in North America, for
example, is 16 times higher than that of people in Sub-Saharan Africa.
FOUR GLOBAL FORCES AFFECTING INEQUALITY
The report looks at the impact that four powerful global forces, or megatrends,
are having on inequality around the world: technological innovation, climate
change, urbanization and international migration. Whilst technological
innovation can support economic growth, offering new possibilities in fields
such as health care, education, communication and productivity, there is also
evidence to show that it can lead to increased wage inequality, and displace
workers. Rapid advances in areas such as biology and genetics, as well as
robotics and artificial intelligence, are transforming societies at pace. New
technology has the potential to eliminate entire categories of jobs but, equally,
may generate entirely new jobs and innovations. For now, however, highly
skilled workers are reaping the benefits of the so-called “fourth industrial
revolution”, whilst low-skilled and middle-skilled workers engaged in routine
manual and cognitive tasks, are seeing their opportunities shrink.
OPPORTUNITIES IN A CRISIS
As the UN’s 2020 report on the global economy showed the climate
crisis is having a negative impact on quality of life, and vulnerable
populations are bearing the brunt of environmental degradation and
extreme weather events. Climate change, according to the World Social
Report, is making the world’s poorest countries even poorer, and could
reverse progress made in reducing inequality among countries. If
action to tackle the climate crisis progresses as hoped, there will be job
losses in carbon-intensive sectors, such as the coal industry, but the
“greening” of the global economy could result in overall net
employment gains, with the creation of many new jobs worldwide.
For the first time in history, more people live in urban than
rural areas, a trend that is expected to continue over the
coming years. Although cities drive economic growth, they
are more unequal than rural areas, with the extremely wealthy
living alongside the very poor. The scale of inequality varies
widely from city to city, even within a single country: as they
grow and develop, some cities have become more unequal
whilst, in others, inequality has declined.
MIGRATION A ‘POWERFUL SYMBOL OF GLOBAL
INEQUALITY’

The fourth megatrend, international migration, is described as both a “powerful

symbol of global inequality”, and “a force for equality under the right conditions”.
Migration within countries, notes the report, tends to increase once countries begin
to develop and industrialize, and more inhabitants of middle-income countries than
low-income countries migrate abroad. International migration is seen, generally, as
benefiting both migrants, their countries of origin (as money is sent
home) and their host countries. In some cases, where migrants compete for low-
skilled work, wages may be pushed down, increasing inequality but, if they offer
skills that are in short supply, or take on work that others are not willing to do, they
can have a positive effect on unemployment.
HARNESS THE MEGATRENDS FOR A BETTER
WORLD
Despite a clear widening of the gap between the haves and
have-nots worldwide, the report points out that this situation
can be reversed. Although the megatrends have the potential to
continue divisions in society, they can also, as the Secretary-
General says in his foreword, “be harnessed for a more
equitable and sustainable world”. Both national governments
and international organizations have a role to play in levelling
the playing field and creating a fairer world for all.
Reducing inequality should, says the report, play a central
role in policy-making. This means ensuring that the
potential of new technology is used to reduce poverty and
create jobs; that vulnerable people grow more resilient to the
effects of climate change; cities are more inclusive; and
migration takes place in a safe, orderly and regular manner.
Three strategies for making countries more egalitarian are suggested
in the report: (1) the promotion of equal access to opportunities
(through, for example, universal access to education; (2) fiscal
policies that include measures for social policies, such as
unemployment and disability benefits; and (3) legislation that tackles
prejudice and discrimination, whilst promoting greater participation
of disadvantaged groups. While action at a national level is crucial,
the report declares that “concerted, coordinated and multilateral
action” is needed to tackle major challenges affecting inequality
within and among countries.
The report’s authors conclude that, given the importance of
international cooperation, multilateral institutions such as the UN
should be strengthened and action to create a fairer world must be
urgently accelerated. The UN’s 2030 Agenda for Sustainable
Development, which provides the blueprint for a better future for
people and the planet, recognizes that major challenges require
internationally coordinated solutions, and contains concrete and
specific targets to reduce inequality, based on income.

https://news.un.org/en/story/2020/01/1055681