World Economic Forum: It’s good to talk, but what’s the reality of income inequality?

30 January 2015

Executive Director’s Blog

Last week world leaders and business executives met in Davos for the World Economic Forum (WEF) annual meeting. This year, there was no escaping the fact that next to climate change, the issue of income inequality (or as some dub it: ‘Income Change’) is one of the biggest challenges of this generation, requiring urgent attention.

Since 1980, income inequality has risen significantly. It has become an inconvenient truth for world leaders despite glaring facts and stark realities, to the extent that the super rich are now buying ‘secret boltholes’ where they can hideout in the event of civil uprising against growing inequality. Sadly, the discussions in Davos on this topic ended without a clear understanding by world leaders of what income inequality really looks like or any offering of bold commitments to reverse this alarming trend.

Fairfood knows all too well what it means to be at the distant end of the income gap in the food and agriculture sector. The global market in most commodities is highly concentrated with a handful of multinational companies dominating the trade and securing most of the value from global supply chains. Smallholder farmers consistently receive only a tiny fraction of the final retail price for commodities sold and farmworkers, especially women, still earn extreme poverty wages akin to the lowest end of the income spectrum.

This is the reality for millions of people who produce the food we eat. Whilst many worry about not getting the latest gadget, or being able to afford car upgrades, and the super-rich plot getaways in yachts or private jets, the farmers and workers we at Fairfood have met in our hotspots, worry of not being able to afford to meet their families’ basic needs.

Our work in Morocco recently revealed that the wages paid to the 70,000 predominantly female Moroccan agricultural workers – including tomato pickers fall well below poverty levels. We discovered that 24,000 workers in the pineapple sector in the Philippines are trapped in a cycle of debt because they are “contractual” workers, who have much lower wages than their counterparts on permanent contracts, and less bargaining power, because they are not allowed to unionise. We have also met with several vanilla farmers in Madagascar, who report that they do not receive a stable income for their vanilla. They cannot plan for the future, or even be sure that they will receive a high enough payment to eke out through the year, and keep their family on. Indeed, 60,000 of these farmers in Madagascar are living below the $1 a day threshold.

Since the WEF annual meetings are instrumental in setting the agenda for both business and governments, it was encouraging to see that the issue of income inequality was high on this year’s agenda. I assumed that this was an indication that world leaders would now step up their game to seriously start addressing this issue and present clear commitments to reverse the trend of this increasing gap between the rich and poor. However, the debates and outcomes of the WEF meeting fell short of this expectation as some of the proposed solutions remain flimsy.

Yet again, world leaders and business executives have squandered a perfect opportunity to offer far-reaching solutions that would really address the needs of people at the lowest end of the gap.

Fairfood is hereby calling on business leaders in the food sector to step up and act now! Food companies need to genuinely be part of the solution. They must start by digging deeper into their cash vaults and by looking hard at the fair distribution of profits to make the gap a little narrower. Paying a living wage to farm workers, which covers their family’s basic needs; and paying a fair price to smallholder farmers, which covers their costs, gives a greater degree of stability over time, and will go a long way to addressing inequality, and ultimately benefit the wider economy.

Anselm Iwundu, Executive Director of Fairfood Interational