How responsive is the G20 to inequality?

A note on the relevance of G20 and its policy agenda, focusing on issues of inequality.  Authored by our civil society partner  in India, the Centre for Budget and Governance Accountability (CBGA).

Against the backdrop of a changing international economic order in the 1990s, the Group of Eight countries (the G-8) announced the birth of G20. In 1999, eleven countries (Argentina, Australia, Brazil, China, India, Indonesia, Mexico, Saudi Arabia, Republic of Korea, South Africa and Turkey) together with the EU were invited to join the existing group of G-8 to broaden the dialogue on key economic and financial policy issues.

The G20 meets once a year to discuss international economic issues. Its primary objective is international financial stability, but it also focuses on longer-term economic issues, shared economic growth, sustainable development, financial transparency, international tax cooperation and combating money laundering etc. The importance of G20 was highlighted especially in the context of global economic crisis, when it was appointed as a crisis management group to move towards economic and financial stability. However, it was not until the Leaders Summit in South Korea in 2010 that the group adopted development issues as part of its agenda. The official recognition of civil society (and the C20) started even later, in 2013.

Although the process of embracing development issues (including inequality) has already started, the G20 has a lot to improve:

  • Over half of the world’s poor live in the G20 countries.
  • The levels of income inequality have been rising in almost all G20 countries in the past 20 years (except for Rep. of Korea, Brazil, Mexico and Argentina).
  • In the US, the wealthiest 1% possesses 40% of the nation’s wealth whereas the bottom 80% own only 7%.
  • In India, the bottom 70% own only 20% of wealth, while the wealth of 46 Indian ‘dollar billionaires’ was in 2012 equivalent to 10% of India’s GDP.

To fight income inequality, a few concrete measures regarding taxation policy has been adopted – it was accorded that by the Brisbane Summit in September 2014, all G20 members will start taking action to counter ‘base erosion and profit shifting’ by MNCs across all industries. It was also agreed to start automatic sharing of tax information by the end of 2015. However, there are other issues apart from income and wealth distribution that exacerbate inequality in the G20 countries, e.g. limited women’s right or access to quality education and healthcare. These issues pertaining to inequality have not featured on the G20 Agenda yet and many civil society stakeholders are flagging this as a major concern with G20.

There is an urgent need for prioritizing a policy framework that would enable reduction of inequalities across the countries. However, the official G20 agenda for the Australia Summit, 2014 is restricted to economic development with sustainable growth, job creation, and open trade. Important issues like social infrastructure, gender, poverty and inequality etc. are completely missing from this official G20 discourse. However, the C20 initiated the process of preparing recommendations to G20 on how it can address growing income inequality in the member countries. It seems that discussion on inequality will continue to be prioritized by the Civil 20 process in the coming years.


Leave a comment

Your email address will not be published. Required fields are marked *

9 − eight =