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Promoting Inclusive Markets and Financial Systems

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Bridging The Income Inequality Gap: Thoughts from #SEEP2016

by on Sep 29, 2016  |  posted in Annual Conference, Populations  |  0 Comments

This blog post originally appeared on the Microlinks Financing Growth Blog.

We are pleased to share it here with the SEEP Community.

“Does growing inequality threaten our ability to obtain sustainable poverty reduction? What are the implications for our efforts to promote more inclusive markets? Can an economic system that creates disproportionate wealth for the few still be considered inclusive?

These are a few of the questions that were asked during, “The Inequality Debate: Inclusive Development in the Context of Growing Income Disparities,” presented by Gawain Kripke of Oxfam at the SEEP Network 2016 Annual Conference.

The statistic as it stands today is that 62 people hold the same amount of wealth as the poorest 3.5 billion.

President Barack Obama defines inequality as the defining challenge of our time and the IMF says it undermines the role of economic growth. The issue is geographically contextual and no one answer fits all, but it is agreed that certain drivers have the potential to start tipping the scale back in favor of the majority, in particular, the poor.

Fair tax policies – Wealth is increasing fast, but so are the wealthy’s ability to move it away from the citizens and governments who should benefit from it. And while the wealthy continue to move their money offshore, it is the government that feels the squeeze on its budget and the public on public services.

Public services – Public services should be available to everyone, including the most geographically marginalized. Increase funding for free public health and public education that will fight inequality countrywide. A child is more likely to attend school if the family does not have to pay for it.

Fair wages – People who are employed should receive fair value for their labor. According to Oxfam, while productivity is on the rise, wages are not. Studies done of garment laborers in Myanmar and Morocco show that the laborers cannot afford food, housing, or medicine, even when they work overtime. And in the US, gender and race discrimination continue to pervade lower wages undermining financial inclusion.

Non-discrimination – Gender discrimination maintains women and youth at the most marginalized lines of the majority preventing them from asset ownership, access to credit and lending practices, pushing them into economic dependence. They work the most precarious jobs for the least amount of pay. Economic growth is not enough to improve economic prosperity. Economic inclusion must be deliberate.

The SEEP Conference invited development practitioners to discuss expanding market frontiers as a way to increase financial inclusion to the poorest of the poor. And while development practitioners are pioneering those frontiers, it is also time for governments to start holding the richest of the rich accountable for their stake in our shared, global economy.

Carla Fernandez de Castro is a Knowledge Management Specialist at Microlinks.

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