Archives for September 10, 2020

Pandemic Exposes the Obscenity of our Economy: 3 Ways We Got Here and 4 Ways We Can Get Back on Track

September 10, 2020

Released today, Oxfam’s report – Power, Profits and the Pandemic – reveals how global corporate behaviour has not only made the economic impacts of the coronavirus pandemic worse, but has also shielded many of these corporations from the economic fallout felt by the rest of us. Throughout the disaster, they have continued to profit and pass these gains on to their mostly wealthy shareholders.

Oxfam found that 32 of the world’s most profitable corporations are together expected to rake in nearly NZ$165 billion more in 2020 than the average of the four previous years. These corporations are household names including Visa, Procter & Gamble, Nestle, Johnson & Johnson, Facebook, Google, Microsoft, and Apple.

This isn’t right. How have we managed to build a global economy that puts more and more wealth in the control of a handful of people, while billions of other people suffer? As of this writing, more than 800,000 people have died from Covid-19. Approximately 400 million people, mostly women, have lost their jobs, which impacts entire families. Some estimates have up to 500 million people being pushed into extreme poverty while the pandemic rages on. Meanwhile, the 25 wealthiest billionaires – some of the largest shareholders in the above-mentioned corporations – have increased their wealth by a staggering NZ$340 billion between mid-March and late-May alone.

How did we get here?

1) Corporations made trillions for the few, almost nothing for the many.

Between 2010 and 2019, the companies listed on the S&P 500 Index paid a total of NZ$13.7 trillion to their shareholders – approximately 90% of their profits over that time. While these corporations could have been investing in the well-being of their workers and climate-friendly technologies, they were channelling the vast majority of their profits back into the hands of a small number of already wealthy individuals. If they had been investing more in their businesses, they would have been more resilient in the face of this crisis. They would have had cash on hand to protect their workers, prevent lay-offs, and avoid costly public bail-outs when the coronavirus pandemic hit.

2) Governments have helped, corporations have not.

The pandemic has highlighted the crucial role our governments play in providing for all people, especially in times of crisis. Yet, many of the largest global corporations have done very little to help. They stand to make NZ$165 billion more during 2020 than in the past four years, and some of their largest shareholders increased their collective wealth by an unfathomable NZ$340 billion during the height of the pandemic. Despite this windfall, these companies’ donations to Covid-19 relief have amounted to less than 0.5% of their 2019 profits. In stark contrast, 94% of their 2020 profits have gone back to their already wealthy shareholders.

3) Corporations prioritised their profits over their own people.

Oxfam has found that more than 400 corporations have continued to make shareholder pay-outs and executive compensation despite laying-off workers and receiving government bail-outs. These companies have shifted costs and risks down their supply chains, impacting workers in vulnerable situations.

This situation is not right

It is the result of a broken economy that works for the few, not the many and puts the wealth of a small number of people before the well-being of our planet and billions of people across the world. But we created this economy — we can fix it. We can reprogramme the economy to put people and the planet at the centre, protect workers in the most vulnerable situations, share profits fairly, and ground it in democracy. The way to do this is by focusing on the four Ps: purpose, people, profits and power.

1) Purpose

We should re-examine the purpose of corporations. A corporation’s ‘reason for existence’ is a policy choice, not an inevitability. Corporations should be redefined to ensure that they exist not only to compensate shareholders, but also to care for workers, consumers, and their communities. The objectives of corporations and director’s duties should include non-financial aims, such as improving social and environmental conditions.

2) People

We should put people at the centre of business models, and insist that corporations invest in decent jobs, protect and promote their workers’ human rights, and address human rights risks, and support efforts for universal social protection.

3) Profits

We should ensure that all stakeholders get a fair share of the profits that corporations create. For example, dividends paid out to shareholders should be capped, and only paid out after corporations are paying a living wage to all their workers and investing in achieving carbon neutrality. These measures should also be extended through corporations’ supply chains, which could have a massive impact on people across the entire world.

4) Power

We should change the rules that currently allow global corporations and their shareholders to have vast amounts of power to protect their own interests. This is possible through increased transparency, and more inclusive and equitable governance structures. Governments should require corporations to limit CEO-to-worker wage gaps, disclose human rights risks, enforce human rights due diligence, and publish corporate carbon footprints. Collective bargaining and robust grievance mechanisms should be enforced. And corporations should prioritise suppliers that give greater voice, power and value to workers and farmers.

We can fix this

As a first step, we propose a World War II-style Covid-19 Pandemic Profits Tax to make sure these corporations do their bit to help us all during this global disaster. Oxfam estimates that the excess profits of these 32 global corporations could raise an estimated NZ$157 billion — enough to pay for Covid-19 testing and vaccines for every single individual on the planet. After that, there would still be plenty left over to invest in supporting small and medium-sized enterprises, protecting workers, and providing robust health services for all.

The coronavirus pandemic has shown us how connected we are as a global human family. Global corporations have grown and benefitted from these connections for centuries, but they have not contributed to the global public good in the way that they should. In fact, in many cases, they have done harm. The excess profits the largest corporations are making through a time of great suffering for millions of people across the world exposes the obscenity of the way our global economy has been built. We need to fix this now so that all people, everywhere, can enjoy the basic dignities of life, on a planet that thrives.

To read the report in full click here

Pandemic profits for companies soar by billions more as poorest pay price – Oxfam

September 10, 2020

Workers producing personal protective equipment (PPE) for health professionals at a garment factory of Urmi Group in Dhaka on March 31, 2020. Credit: Sk Hasan Ali

Some corporations are cashing in on Covid-19 on behalf of the wealthiest

Thirty-two of the world’s largest companies stand to see their profits jump by USD$109 billion more in 2020 as the Covid-19 pandemic lays bare an economic model that delivers profits for the wealthiest on the back of the poorest, according to a new Oxfam report today.

Power, Profits and the Pandemic shows how during the global pandemic corporations across the globe have put profits before workers’ safety, pushed costs and risks down the supply chain, and used their political influence to shape policy responses.

Globally, half a billion people are expected to be pushed into poverty by the economic fallout from the pandemic. 400 million jobs have already been lost and the International Labour Organisation estimates that more than 430 million small enterprises are at risk.

Meanwhile, the 25 richest billionaires increased their wealth by a staggering USD$255 billion during the global crisis. Jeff Bezos could personally pay each of Amazon’s 876,000 employees a one-time USD$105,000 bonus today and still be as wealthy as he was at the beginning of the pandemic.

Oxfam New Zealand Communications and Advocacy Director Joanna Spratt said: “The pandemic has laid bare what we already knew to be true – our global economy is broken. With millions out of work and governments struggling to effectively respond to the pandemic, companies earning exorbitant profits for the already wealthy and well-connected will no longer suffice.

“Covid-19 has been tragic for the many but good for a privileged few. Corporations have exacerbated the economic impacts of the pandemic by funnelling profits to shareholders instead of investing in better jobs and climate-friendly technology, paying their fair share of taxes, and prioritising profits over people,” Spratt said.

Oxfam is calling for a response to the immediate crisis that prioritises support for workers and small businesses. It includes establishing a Covid-19 Pandemic Profits Tax to ensure shared sacrifice, and the redeployment of resources away from those cashing in on the pandemic and toward those bearing the burden.

“These outrageous and outsized gains should be taxed to level the playing field between companies and raise much needed funding for Covid relief and recovery,” said Spratt.

For perspective, redeploying the excess pandemic profits of just 32 of the most profitable corporations using this tax could pay for Covid-19 testing and vaccines for everyone on the planet, plus USD$33bn more to invest in building a 21st century frontline healthcare workforce.

“This was a popular and effective tool for many allied countries during World War II, as an excess or pandemic profits tax is designed to tax the portion of super profits that large companies derive not from hard work, but from an external event the company had no hand in making.”

Long-term, Oxfam is asking policymakers and corporations to re-balance corporate purpose, profits and power away from exclusively benefiting executives and shareholders towards workers, suppliers, consumers and communities.

“Oxfam is calling for a reprogramming of the faulty global economy. Governments must enact corporate reform to ensure every worker is paid a living wage, has a safe place to work and a voice in the workplace before a single dividend is paid to shareholders. Corporations must pay their fair share of tax and policy makers must rein in corporate power to stop them from rigging the rules.”

Spratt said our broken economic model has allowed corporations to exploit the system and further deepen existing inequalities.

“What this situation shows us like never before is how we’ve built a global economic system that does not protect people or the planet, but funnels ever-increasing amounts of wealth to a small number of people – mostly white men in rich nations – who already have more than they need.

“At this point, we have no choice but to overhaul the rules that govern this broken economic model. A system that allows corporates to get away with such obscene imbalances of power and money should no longer be tolerated.

“The solution starts and ends with an economic model that puts people at the centre, protects the most vulnerable, shares profits equitably, and is grounded in democracy. It starts with taxing excess profits made during the pandemic by a few for the public good.”

Spratt said: “We are at a critical juncture. We have a choice between returning to ‘business as usual’ or learning from this moment to design a fairer and more sustainable economy.”

“Unless we change course, economic inequality will increase and the divisions that hurt us all will become even more entrenched.”

-ends-

For more information or to arrange an interview please contact:
Kelsey-Rae Taylor | Kelsey-Rae.Taylor@oxfam.org.nz | +64 21 298 9854

Notes to editors:

Power, Profits and the Pandemic is available here

All figures in USD
For perspective, redeploying the excess pandemic profits of just 32 super-profitable corporations using this tax could pay for COVID-19 testing and vaccines for everyone on the planet, plus USD$33bn more to invest in building a 21st century frontline healthcare workforce.
The 32 companies expected to make additional profits of USD$109bn in 2020 are listed in the table below. The table lists annual average profits and dividend pay-outs for the period 2016-2019, and 2020.
Jeff Bezos is the founder and owner of Amazon. Amazon’s market capitalization is over USD$1.5tn[1] and Jeff Bezos is now the richest man on earth worth around USD200bn.[2] His wealth has increased with USD$92 billion in only five months, between 18 March and 20 August 2020. Bezos could have paid each of Amazon’s 876,000 employees a USD$105,000 bonus and would still be as wealthy as he was at the onset of the pandemic.[3] Invested over 25 years at 6% interest rate this bonus would increase to USD$450,000 in retirement savings for each employee.

[1] P.R. La Monica. (2020, July 10). Amazon, Apple and Microsoft race to $2 trillion. CNN. https://www.cnn.com/2020/07/10/investing/amazon-apple-microsoft-market-value/index.html
[2] Forbes. (2020, August 26). Jeff Bezos Becomes The First Person Ever Worth $200 Billion. https://www.forbes.com/sites/jonathanponciano/2020/08/26/worlds-richest-billionaire-jeff-bezos-first-200-billion/#64e574b44db7
[3] https://www.forbes.com/profile/jeff-bezos/#7cb1a86a1b23; https://www.businessinsider.com/jeff-bezos-net-worth-life-spending-2018-8; https://www.geekwire.com/2020/amazon-tops-935k-employees-week-pandemic-driven-hiring-spree-continues/

Power, Profits and the Pandemic Report

September 10, 2020

The worsening inequality crisis triggered by COVID-19 is fuelled by an economic model that has allowed some of the world’s largest corporations to funnel billions of dollars in profits to shareholders giving yet another windfall to the world’s top billionaires, a small group of mostly white men. At the same time, it has left low wage workers and women to pay the price of the pandemic without social or financial protection. Since the onset of the pandemic, large corporations have put profits before workers’ safety, pushed costs down the supply chain and used their political influence to shape policy responses. COVID-19 should be the catalyst for radically reining in corporate power, restructuring business models with purpose and rewarding all those that work with profits, creating an economy for all.

Click here to read the full report.

Investigation into EU’s role needed after fire destroys infamous Moria refugee camp, say GCR and Oxfam

September 10, 2020

A fire has destroyed most of the notorious refugee camp of Moria in Lesbos, Greece. The EU-sponsored ‘hotspot’ camp hosted more than 12,000 people, despite an official capacity of less than 3,000.

Reacting to the news, Spyros-Vlad Oikonomou, Advocacy Officer at the Greek Council for Refugees, said:

“This fully preventable tragedy should trigger a U-turn in the EU’s and Greece’ response to the arrival of people seeking asylum in Europe, which has clearly failed.

“The announced transfer of all unaccompanied children in Moria to the Greek mainland is a first important step to alleviating this humanitarian crisis. EU governments must now immediately support Greece in moving all people seeking asylum from the islands’ refugee camps to safe places across Europe.”

Oxfam’s Europe Migration Campaign Manager Evelien van Roemburg, said:

“The ongoing humanitarian tragedy that led to this devastating fire is the consequence of years of a misguided response from the EU and its member states to the arrival of people fleeing conflict and persecution. Without ignoring the responsibility of the Greek state, the European Parliament must launch an investigation into the policies and practices of the EU and its member states which have led to the complete mismanagement of the EU-sponsored hotspots on the Greek islands.

Notes to editors:

Spokespeople are available in Athens, Brussels and the Netherlands.
The facility for unaccompanied children in Moria camp has been completely destroyed. The European Commission announced this morning that the EU would finance the immediate transfer and accommodation on the mainland of the 400 unaccompanied children that still remain on the island.
More than 6,000 people have become homeless, as the fires destroyed both parts of the official camp and the tents in the over-spill areas surrounding the camp.