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G-20 confronts income inequality scourge

Wednesday, February 11, 2015 - 00:26

[ISTANBUL Group of 20 finance chiefs for the first time signaled joint concern on mounting income inequality across the world economy.

"In some countries, potential growth has declined, demand continues to be weak, the outlook for jobs is still bleak and income inequality is rising," finance ministers and central bankers from the leading industrial and emerging markets said in a statement released after talks in Istanbul on Tuesday.

The G-20 officials have never explicitly mentioned income disparity in a communique since their leaders made the body the main coordination forum of international economic policy in 2009. It reflects growing concern that the gap between rich and poor has widened following 2008's financial crisis and may threaten economic and political stability.

"We will also strive to ensure that growth is inclusive, including through policies that address income inequality," the officials added in another section.

Federal Reserve Chair Janet Yellen and Bank of England Governor Mark Carney are among those in Istanbul who have said in the past year that inequality may pose an economic risk.

The Paris-based Organization for Economic Cooperation and Development estimates the gap between rich and poor is at its highest level in most of its countries in three decades. The richest 10 per cent of the population in its membership earn 9.5 times more than the poorest 10 percent, up from 7 times in the 1980s.

A "reform agenda can help boost jobs, productivity and support demand, which is crucial to preventing the development of a vicious circle whereby weak demand and growing inequalities undermine potential growth and confidence, possibly leading to persistent stagnation," OECD Secretary-General Angel Gurria said on Monday in Istanbul.

Anti-poverty charity Oxfam said last month that the richest 1 per cent are about to control a majority of the world's wealth by 2016.

BLOOMBERG