The income gap

Sep 01, 2012 Letters

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Dear Editor,
According to a recent World Bank Report, deep structural reforms are needed to close the income gap between the rich and the poor in Latin America and the Caribbean which is regarded as one of the regions of the world with the greatest inequality.
This income inequality, according to the report, has worsened with the richest one-tenth of the population earning 48% of its total income while the poorest tenth earns a paltry 1.6%.
One consequence of this has been high levels of social and economic marginalization among an increasing number of the region’s population who are pushed further into the backwaters of human development.
This inequality slows the pace of poverty reduction in the region and undermines the process of development itself, according to the bank.
The income gap is much more pronounced in some countries in the region such as Argentina, Uruguay, Brazil and Venezuela. Race and ethnicity were identified as key factors in determining the opportunities and welfare available to people in the region. According to the report, indigenous and Afro-descended people are at considerable disadvantage with respect to whites, with the latter earning the highest wages in the region.
For example, the report found men and women of African-descent earn about 45% of their white counterparts even though there had been some improvements in Mexico and Brazil where the economy has become healthier.
One positive development has been the relative closing of the gender gap with girls and young women overtaking their male counterparts in the field of education.
To overcome the inequality that undermines their chances to get out of poverty, the Bank recommends that poor people must gain influence within political and social institutions, including educational, health and public service institutions.
In the United States of America, there has been rising concern over the skewed income distribution which has resulted in the marginalization of not only the poor but the middle income group as well. A recent poll found that most Americans believe that the rich is not paying their fair share of taxes and that the tax burden is falling disproportionately on the low and middle-income earners. This is likely to be a major challenge for the Republican Presidential hopeful Mitt Romney who is seeking to unseat incumbent President Barack Obama in the November Presidential elections. So far the polls are indicating a tight race with President Obama enjoying a slight lead in the polls. His major problem is high unemployment rates and sluggish economic growth which is not showing signs of any recovery.
The issue of better income distribution and greater social justice is one that has been at the centre of the current PPP/C administration programmatic and policy interventions. This is manifested in the increasing share of the national budget in the social sectors more particularly in education and health both of which are central to the physical and cultural advancement of the Guyanese people. This is particularly true for the hinterland and Amerindian communities which historically were marginalized by the colonial administration and subsequently by the PNC regime. The income gap between the coastland communities and hinterland communities has narrowed even though significant levels of income disparities still continue to persist.
Overall the rate of poverty in the country has been reduced significantly since the assumption to office of the PPP/C. This resulted largely from the several policy interventions by the PPP/C administration over the years. It is no exaggeration to say that the quality of life of the Guyanese people has improved continuously over the past years as reflected in the expansion of the entertainment and services industry. The number of Guyanese who are today the proud owners of their own homes and vehicles have increased dramatically, not to mention the increase in consumer spending. Today, the range of consumer items on display at stores and supermarkets compares favourably to those of the developed world, an indication of a growing prosperity and more sophisticated consumer taste.
No objective and unbiased individual can deny the fact that the quality of life today has improved markedly over the past decade or so. Of course, we all would like to see a bigger basket of goods and services from our income but this can only be realized as the economic pie gets larger. Paying wages and salaries beyond the capacity of the economy would only fuel inflation and a deterioration of the purchasing power of the Guyana currency.
Hydar Ally

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