PANDEMIC v/s GFC INCOME INEQUALITY

 
A financial crisis like 2008 lead to the redistribution of wealth from the poor to the rich and now this pandemic does the same thing but with a fearful stance. The pandemic has created not the only disruption in the way we will be living our life in the next few years but also has gifted one of the sudden income inequalities. Stimulus cheques will not be forever and the impact of income inequality is long term story.

This pandemic has created one of the longest income inequalities.  The rising income inequality leads to the creation of food parks for feeding hungry people. Well, don’t be surprised that if we tell you that the U.S is facing a situation of rising hunger.

As job losses skyrocketed, the number of Americans facing food insecurity reached 265 million in 2020, according to a North-western University estimate.

This pandemic has made one of the fastest transfers of wealth from the poor and middle class to the rich segment.  This transfer has created income inequality across countries and societies. Further, this loss of life will widen the income inequality in the coming days to deeper and more troublesome for the global economy.

 Every country was not able to print money and transfer it to bank accounts.  A country like India is beyond question currently when the 2^nd wave has ravaged life and society.  The current state of health speaks loudly that emerging economies have a long way to manage and develop their health care system.   The poor healthcare system followed with improper planning for the pandemic has created income inequality in two ways 1) Loss of life and sole earning member job and irreplaceable 2) Inflated cost of broken healthcare facility leads to transfer of savings and wealth.

The 2008 Financial crisis and the one which is created are completely different. The GFC was managed through the creation of jobs in a slow progress manner whereas in the current scenario the wealth and wealth earner both are destroyed.

When the team dig further to figure out the depth of the crisis of pandemic on income inequality we find that every corner of the society is impacted. Low-interest rates kill the ones who are about to retire or already retired during or just before the pandemic. Countries that don’t have social security benefits, well it’s beyond calculation for the state of life of these people.   Even in a country like the U.S, the major beneficiaries have been the wealthiest 10% of Americans, who owned 89% of stocks and mutual fund shares held by U.S. households as of year-end, according to Fed statistics. More than half of that 53%  is owned by the top 1%.

In another study, it has been found that  the global labour income decreased about $3.7 trillion in 2020, which was equal to 4.4 % of GDP in 2019. The global employment loss for women was 5.0% and 3.9% for men, unsurprisingly showing gender inequality.

Income inequality creates prostitution, gambling, crimes and a disrupted society. The current inflation burden of food will leads to further disruption in income inequality. Extended retirement life and post-retirement job application increases.  Those families who have lost the sole bread earner those families and kids face a significant challenge.

The government across the world needs to identify the income inequality grey areas and frame policies and social benefits accordingly. Identification of income inequality areas and framing public-private policy framework is the only way to stop society disruption.  The CSR activities and the utilization of unused resources need to be activated so that employment is being created and the society is saved from massive income inequality impact. We need stringent guidelines regarding child labour, CSR sponsored free education system and mandatory allocation guidelines from the CSR. We need private sector guidelines for extended retirement age so that the ground level doesn’t get into communal war.

We don’t say that doing these activities will eradicate or reduce the income inequality significantly within a year but yes over a few years it will not be having a severe impact. This income inequality is going to be the longest one which will take a decade to get back on feet.