Opening Remarks at Theme Study on Inequality

Delivered at Theme Study on Inequality in Bangkok, Thailand

Your Excellencies,

Distinguished guests,

Welcome to this session: inequality in the era of the 2030 Agenda for Sustainable Development.

By way of background, let me share with you the analysis and key messages of the report on inequality. These have profound implications for policy makers.

First, inequality is on the rise in our region.

Market-led growth alone is insufficient to deliver an inclusive, prosperous and sustainable future. Over the past 30 years, income inequality increased in 4 of the 5 of populous countries, home to over 70 per cent of the region’s population. China’s income inequality rose by close to ten percent. Indonesia’s by over eight percent, and Bangladesh and India’s by four and five percent.

Inequality of opportunity and access to services are pervasive. In the region, education, clean fuels, basic sanitation and bank accounts remain out of reach for many citizens and only some 40 per cent of the region’s population has access to health care services. While some income inequality is arguably inevitable, inequality of opportunity is real barrier to development.

Second, the rise in inequality has an enormous opportunity cost.

For instance, evidence for Asia and the Pacific indicates a one percentage point increase in the Gini coefficient reduces the GDP per capita by over $150 in our countries. Had income inequality not increased over the past decade, close to 140 million more people could have been lifted out of poverty, and women could have had the opportunity to attend school. In many countries, only 5 out of every 100 women from poor rural household can complete secondary education.

Third, inequalities perpetuate environmental shocks. Poorer households rely on traditional and inefficient fuels for cooking and heating. The indoor air pollution this creates causes more than 2 million deaths per year in China and India alone. Natural disasters cause disproportionately greater impacts on poorer countries and the most vulnerable who live increasingly in flood-prone and cyclone-exposed coastlines.

Fourth, a digital divide and newer frontier technologies can perpetuate inequality. The disruptive impacts of technology are likely to be of an unprecedented speed and scale and there are risks that benefits of technological progress will not be shared evenly.

Reversing inequality requires investing in people.

The 2030 Agenda: Goal 10 offers a framework for addressing inequality in all its forms, driven by a commitment to leave no-one behind. In a diverse region like Asia and the Pacific, reversing inequalities calls for suitable solutions supported by a range of policy options that entail costs. So investing in social protection system is key, as is establishing a social protection floor, through income support such as cash transfers encompassing basic healthcare services, primary and secondary education and vocational training to low-income families.

Our region has adopted a wide variety of social protection schemes. Kazakhstan and the Philippines have closed the education gap not only in terms of access but also quality. ESCAP social protection toolbox is useful to demonstrate how social protection delivers returns.

Climate change, disasters and environmental degradation magnify inequality.

Climate change is magnifying disaster risk which ends up dragging people back into poverty. Investments in the adaptive capacity of communities in the region’s most vulnerable and disaster-prone areas such as small island states, river deltas, semi-arid regions or cities – are essential.

Environmental degradation undermines livelihoods and has a disproportionate impact on the health and welfare of poorer communities. Developing an understanding of the transmission channels by which environmental hazards impact on poor and disadvantaged groups helps target better resolution mechanisms for environmental contamination and degradation, and air pollution. ESCAP is working to develop environmentally sustainable and low-carbon pathways, better urban planning and spatial development.

Increasing effectiveness of fiscal policies is a precondition to tackling inequality

An effective tax system with an adequate level of progressivity and strong revenue generating capability ought to be deployed to redistribute spending – with the former focused on tapping resources from the vast income and wealth accumulated, and the latter by deploying public finance for shared prosperity.

In many parts of Europe and in the developed parts of Asia-Pacific, Gini coefficients can be high. But after taxes and transfers, they fall by up to 20 percent, to establish more egalitarian societies and economies. Effective public financial management supported by stronger governance regimes and political will is needed to ensure tax structures are balanced and boost compliance – and to improve the composition and efficiency of public expenditures.

Finally, improvement in data collection and proper identification numbers are key target both tax compliance and redressal of inequality.

To identify those at risk of being left behind and target policymaking national data collection needs to allow for better disaggregation. Better surveys are needed to capture how unequal opportunities impact on individual and household decisions and why certain families take their children out of school or continue using unhealthy and polluting energy options.

To conclude, Asia-Pacific is not fully on course to reduce inequality in line with the Sustainable Development Goals. As a region, we are moving farther away from them in some areas. But Governments have a range of tools at their disposal to better understand and address the challenges associated with inequality. The same focus and investments that delivered extraordinary economic growth and poverty reduction can also deliver better and different outcomes to reduce inequality.

With this, let me now give the floor to our eminent speakers, to hear more about how they would recommend doing so.