Homeless people in India Foto: Vereinte Nationen
The hope that poverty, or at least extreme poverty, will disappear from our lives in the medium term, has now suffered a severe setback – due to Corona. But was this hope ever justified in any way? What was it based on?
Well, it was the Millennium Declaration of the United Nations from the year 2000 that seemed to give reason to all this optimism. In this document the countries of the earth set the goal, to cut extreme poverty in half by 2015. Did they succeed?
Before we can answer this question we have to define „extreme poverty“. To measure wealth and poverty by using the GDP per person, as was very common in the last century, is no widely regarded as obsolete because it ignores the inequality of income. The UN have decided to measure poverty not relatively but absolutely. Most countries use relative measurements for poverty, for instance persons that earn less than 505 of the average income are considered to be poor.
The UN have established an absolute limit: Who has less than a dollar per day at his disposal is considered to be extremely poor. But it is not the nominal US-Dollar they are talking about but a virtual Dollar that represents the purchasing power of a Dollar, which is figured out by using a consumer price basket (Dollar ppp: purchasing power parity). When objections were heard, that this measurement disregards inflation, the limit was augmented to $ 1.25 ppp, the current valid limit is $ 1.90 ppp.
Dollar 1.90 ppp is now considered to be the amount of money you need to survive given the conditions of the place you live in. The extreme poor live below this subsistence level.
The United Nations has set itself the goal of halving the proportion of the extremely poor in the population between 1990 and 2015. The following diagram shows whether they succeeded.
The answer is clearly: yes, they did. They even exceeded the target. How did that come about? The following two maps give some hints.
Whereas in 1990 East-Asia and Africa were the poorest regions on earth, this changed by 2015: In East Asia the number of the extreme poor has dropped to below 5 percent.
How this happened in the course over time is being displayed by diagram Nr.2.
In this diagram some regions are missing, not just for the reason of better clarity. The Arab Countries are missing, because they have not provided enough data. Especially in countries where many migrant workers live and constitute the vast majority, it is not clear, if they are counted as inhabitants.
The situation in the Arabic countries is very different from country to country. A report of the German television station „Tagesschau“ (televised on August 3rd 2020) sheds some light on the situation in Qatar.
“Foreign migrant workers who build FIFA stadiums for starvation wages under inhumane conditions and in scorching heat: images that have sparked international outrage and sharp criticism of Qatar. In one of the (oil) richest countries in the world, people were and are exploited like slaves. Now the emirate is reacting and introducing a generally applicable minimum wage.
As announced by the Ministry of Labor in Doha, workers will have to get at least 1000 riyals – the equivalent of 231 euros – for one month of full-time work. This corresponds to an hourly wage of around one euro. Employers must also provide their employees with food and accommodation – or pay them an additional 800 riyals per month.
It also makes it easier for employees to change employers. So far, when changing jobs, they had to present a certificate stating that their previous employer did not raise any objections.
Just a few days ago, human rights activists from Human Rights Watch presented a report in which they criticized Qatar’s efforts to improve conditions for migrant workers as inadequate. After that, some workers have to starve because employers illegally withhold wages. Workers from abroad make up 90 percent of the population of the rich Gulf state.”
https://www.tagesschau.de/wirtschaft/katar-mindestlohn-101.html
Let me comment: € 231 per months is not too far from the poverty line of $ 5.50 per day. And this minimum wage was introduced way too late and only after heavy pressure from the world public. And the fact that workers wanting to change their work place had to ask for the permission of their employer is certainly not compatible with fundamental human rights. Given work conditions in this country in any case are in stark contrast to the remark of FIFA representative and former soccer star Franz Beckenbauer, who said he had „never seen one single slave in Qatar”.
Poverty and extreme poverty
So what changed so dramatically between 1990 and 2015 is the economic situation in East Asia, especially China. The country has undoubtedly become the engine of growth not only for the region but also for the whole world. But has poverty really disappeared completely in China that quickly? What if we ask not only about extreme poverty but also about poverty overall?
The UN has also introduced absolute figures for this, namely the limit values of $ 3.30 and $ 5.50 ppp. The following graph shows the global development of poverty with a measured value of $ 5.50 per day.
We see that a much flatter curve here, so there can be no question of halving poverty overall.
In East Asia, too, poverty has by no means completely disappeared. Nevertheless, the development in East Asia is quite impressive.
But you shouldn’t be fooled by the income trend. The country’s domestic product is the second highest in the world. But China has a huge population. If one converts the GDP to the individual inhabitants, one inevitably comes to the conclusion that the development of poverty also confirms: Despite everything, China is still a poor country. Nancy Quian in the ipg-Journal:
For most economists, China’s GDP per capita – or to put it another way: income per person – is more important. And the key lesson here is that, despite the phenomenal growth in its GDP over the past four decades, China remains a poor country. In 2019, China’s GDP per capita was $ 8,242. This places the country between Montenegro (US $ 8,591) and Botswana (US $ 8,093). Its GDP per capita at purchasing power parity – that is, after adjusting income for the cost of living – was $ 16,804. This is below the global average of $ 17,811, making China 86th in the world, between Suriname ($ 17,256) and Bosnia and Herzegovina ($ 16,289). In contrast, GDP per capita according to purchasing power parity in the US and EU is 65,298 and 47,828 US dollars, respectively.
At the end of this chapter I present two maps on the country level, one for poverty ($ 5.50) and one for extreme poverty, so that you can get an idea of the differences within the regions.
How will global poverty develop in the future? At the UN summit on September 25th 2015 the „Agenda 2030 for a sustainable Development has been adopted. The new goal is to completely erase poverty in all forms and everywhere by 2030. That sounds very ambitious, and it is very likely that it will not be achievable, at least not in time.
Even with the suppression of extreme poverty, there is a slowdown in the rate of decline. From 2015 to 2019, extreme poverty only fell from 10 to 8.2 percent, much more slowly than in previous years.
Now facing the pandemic, we have to realize that conditions have changed. Corona has caused extreme poverty to rise again for the first time in 30 years. For 2021, the UN experts estimate the level of extreme poverty at 8.8 percent. Without corona it should have been down to 7.7 in 2020 and 7.4 in 2021. Since the development of the pandemic is unpredictable, the struggle against poverty could suffer an even stronger setback.
https://www.un.org/Depts/german/millennium/SDG%20Bericht%202020.pdf
https://www.un.org/Depts/german/millennium/SDG%20Bericht%202020.pdf
https://www.bmz.de/de/service/lexikon/armut-14038
https://nachhaltig-entwickeln.dgvn.de/agenda-2030/ziele-fuer-nachhaltige-entwicklung/sdgs/#c21161