ALL SOCIETIES HAVE the rich and poor – the haves and the have-nots. Whether it is the world’s most powerful economy the United States, or a small tourism-dependent nation like Barbados, there are people who are able to live in luxury while a larger portion of the population wonders where the next meal will come from.
In a provocative report issued recently, the International Charity Confederation stated that eight men (Bill Gates, Amancio Ortega Gaona, Warren E. Buffett, Carlos Slim Helú, Jeff Bezos, Mark Zuckerberg, Lawrence J. Ellison, Michael R. Bloomberg), were together as rich as half the world’s population.
So that in 2017, income inequality and associated phrases such as minimum wage remain as prominent as they were 20 years ago.
In fact, some individuals would say such issues are even more significant.
Minister of Commerce Donville Inniss addressed the minimum wage issue recently in the House of Assembly when he led off debate on the Minimum Wage Bill.
The measure included the establishment of a special minimum wage advisory board to help the authorities determine minimum wage for various categories of workers.
“I want to emphasise that this . . . legislation does not fix or set minimum wages, it primarily seeks to establish a structure, an advisory board, that will advise the minister as to how such wages ought to be determined,” the minister said.
Ironically, one week later the House discussed and approved the restoration of a ten per cent pay cut for ministers, parliamentarians and others as part of Government’s fiscal consolidation measures. With public servants on a wage freeze for the last eight years, the issue of inequality in this context was a major point of contention.
The issue goes beyond politics. Speaking in April 2011, at the 11th Annual Caribbean Public Policy Lecture at the University of the West Indies, Cave Hill Campus, then outgoing Caribbean Development Bank president Dr Compton Bourne called income and wealth inequality “a major problem” for the Caribbean.
“The incidence of income inequality is quite substantial in the region. There is an indication that in some countries that inequality has widened, so that the problem [with] differences in income levels has become more acute.
“Income and wealth inequalities . . . usually entail unequal access to opportunities in market-oriented societies,” the economist said.
“Inequality has the consequence of corroding or preventing the emergence of social trust; the bond that people share in a society across economic and ethnic groups and across religions and races.”
Does a minimum wage policy make a difference to income inequality?
In a 2007 paper titled The Potential Impact Of A Minimum Wage On Poverty And Income Distribution In Barbados, authors Rudolph Browne, Winston Moore, and Shernel Thompson concluded: “ . . . The implementation of a minimum wage would have only a marginal impact on inequality.
“Further, these gains are disproportionate, as the minimum wage pushes more individuals into the middle-income or lower middle income groups, and at the same time reduces the incomes of those individuals at the bottom of the income ladder.”
Last year, in an article published by the World Economic Forum, United Nations Economic Commission for Latin America and the Caribbean executive secretary Alicia Barcena and Oxfam International executive director Winnie Byanyima said inequality in Latin America and the Caribbean was “growing at an alarming pace and poses a serious risk to economic growth, the fight against poverty and social stability”.
“Although income inequality has fallen in recent years, Latin America remains the most unequal region in the world. In 2014, the richest ten per cent of people in Latin America had amassed 71 per cent of the region’s wealth. If this trend continues, according to Oxfam’s calculations, in just six years’ time the richest one per cent in the region will have accumulated more wealth than the remaining 99 per cent,” they said.
In a recent International Monetary Fund staff discussion note, Causes And Consequences Of Income Inequality: A Global Perspective, authors Era Dabla-Norris, Kalpana Kochhar, Nujin Suphaphiphat, Frantisek Ricka, and Evridiki Tsounta concluded that “policymakers around the world need to consider policies to tackle inequality”.
“Raising the income share of the poor, and ensuring that there is no hollowing-out of the middle class is actually good for growth,” they added.
“ . . . The nature of appropriate policies would necessarily vary across countries, and would also need to take into account country-specific policy and institutional settings, and capacity/implementation constraints.”
