How SDGs Can Help to Stem the Growing Income Inequality

Peter A.G. van Bergeijk and Rolph van der hoeven explore the role Sustainable Development Goals play in reducing income inequality.

Growing and persistent income inequality in many countries is an important subject that increasingly pervades in economic, social and environmental systems. According to the World Inequality Report 2018 income inequality has increased globally and in nearly all world regions in recent decades, highlighting the important roles of governments to mitigate inequality. One of the major instruments of global governance and development, the Millennium Development Goals did not consider inequality at all. Indeed, this was a great omission in an era of increasing inequality.

The United Nations Sustainable Development Goals (SDGs) contain a goal to reduce inequality (goal 10), but the target related to this goal is insufficient as it relates only to progress of the bottom 40 per cent of the population. This means that specific developments for both the poorest and the richest parts of the population (and their relative development) are out of focus. As a consequence the SDGs do not pay sufficient attention to income inequality, because there is no sensible indicator to attest the growing importance of the growing cleavages between income of work and income of capital, the income of super rich (the top-1 per cent) and the average income level of the population. This cleavages which manifest themselves in much more visible form in emerging and in developed countries. Yet it is important to give attention to the behaviour of the rich, as ignoring their ascendency will put the social fabric under strain, as shown in some Latin American, Asian and African developing countries, as well as in many developed countries. This is thus a highly significant weakness of the SDGs because inequality in the end co-determines success and failure on many, if not most, of the SDG targets. Indeed, the strongest hubs in the network of SDG targets occur for ‘inequality, poverty and growth and employment’.

Sustainable Development Goals and Income Inequality argues that the economic debate in the policy institutions and global fora should not only to be based on current statistics of GDP and other economic phenomena, but also need to include alternative measures of development, such as the Human development Index, greening economic progress and special attention in all measures to the bottom 40 per cent of the population in relation to the top 10 per cent of the population (the so-called Palma ratio). Despite the fact that this ratio was not mentioned in the final formulation of the SDGs, the contributors argue that ought to be part of national reviews on progress on SDGs. Here academics and civil society can play an important role to get income inequality on the policy agenda.

Sustainable Development Goals and Income Inequality does not provide a panacea to tackle the income inequality problems that increasingly emerge inside and between countries, but it bring together the pieces of a coherent puzzle. Importantly, the contributors propose several innovative ideas that may strengthen the SDG approach. These ideas comprise of proposed new and better measures of inequality, new evidence-based policies and active involvement of civil society in order to call governments in the Global North and Global South as well as the UN system to task on growing national and international income inequalities and demand measures which go beyond the formulation of some of the vaguely formulated goals and targets, but which do correspond to the general language of the SDGs and the Post-2015 Development Agenda. Indeed (thus strengthened) SDGs could form the basis of a global social contract for an effective development partnership.

Elements of such a global social contract should include first the right to development especially the economic, social and cultural rights and the basic elements thereof in the form of non-discrimination, participation and accountability. Second, the contract should include the introduction of a global social floor, which is financially possible provided that international financial system is reformed. Importantly, SDGs offer an opportunity to strengthen the coherence, at national and international level between social, economic and environmental sustainable policies.

Edited by Peter A.G. van Bergeijk and Rolph van der Hoeven, Erasmus University, the Netherlands

Sustainable Development Goals and Income Inequality is available now.

Read Chapter 1: The challenge to reduce income inequality on Elgaronline.