Reduce inequality within and among countries


SDG 10: Reduce inequality within and among countries

SDG 10 aims to reduce inequality within and among countries. Inequality can erode trust and leave the most marginalized behind. At the same time, reduced inequality is associated with stronger, more sustainable growth.

The global context chapter (chapter I) finds that income inequality within countries has increased over the past three decades in about half the countries where estimates have been made. Indeed, most people live in countries with increasing income inequality, and individuals in the bottom 10 percent of income scales in many countries have seen little or no growth in disposable income over the last decade (section 3). Many factors have contributed to this trend, some of which are discussed in this report. Advances in technology are displacing low- and medium-skilled workers while benefiting higher-skilled workers, thus exacerbating inequality, as discussed in chapter III.G (section 3). As highlighted in chapter III.B, market concentration has been rising across a range of industries in some countries, particularly in the digital economy, with a high concentration of profits among a few companies and locations (section 7.2). Such concentration has contributed to a decline in the share of wages in favour of profits, raising inequality. Chapter III.B also explores how the financial sector has impacted inequality. On the one hand, financial development benefits the poor, with better access to financial services helping some people escape poverty (section 7.1). Promoting financial inclusion can thus have a positive impact on inequality when implemented with consumer protection. Financial inclusion can also reduce transaction costs for migrant remittances (SDG means of implementation target 10.c) (section 6.1). On the other hand, excess financialization may contribute to greater income inequality, as the financial sector appropriates a disproportionate share of profits and may lead to some degree of regulatory capture (section 7.1). Excess financialization may also result in an unsustainable build-up of debt, increasing the risk of a financial crisis, which may widen inequality. Policy solutions will require efforts across government, including revisiting competition policy, as well as promoting regulatory and other policies aimed at reducing financial and capital market risks and ensuring that finance benefits the real economy (chapter III.F section 3). Chapter III.A discusses the role of fiscal systems in reducing inequality. Fiscal systems can incorporate impact analysis on inequality on both taxation and expenditure (section 3). Effective and progressive tax systems can lower inequality, as can public spending, including the provision of public services and social protection. Labour policies, such as minimum wages, and efforts at formalizing businesses, which allows better enforcement of labour rights, also lower inequality. The benefits from international trade have not been shared equitably and have required costly adjustments from some groups of workers, though recent research shows this effect might be smaller than believed. Chapter III.D underlines that expediting preferential market access for least developed countries (SDG means of implementation target 10.a) should contribute to making trade more inclusive, (section 2.2). Investment in education and training to provide workers with skills in high demand also helps reduce inequality (section 6.2). Tackling inequality requires partnership–governments, the private sector, and civil society working together to eradicate discrimination against women, design the right labor market reforms, and strengthen education, training and social protection systems. While certain policies can be implemented at the national level, others require international efforts, for example, international tax cooperation (chapter III.A section 5), global governance (chapter III.F, box 2) and the monitoring of global market concentration trends (chapter III.B section 7.2). Key international efforts to reduce inequality also include enhancing official development assistance flows (SDG means of implementation target 10.b), which are covered in detail in chapter III.C.


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