Reduced Inequalities

Domestic public finance is essential to financing the Sustainable Development Goals (SDGs), providing public goods and services, increasing equity, and helping manage macroeconomic stability. The Addis Ababa Action Agenda places domestic resource mobilization at the core of the actions that countries need to take to deliver sustainable development. Countries have been working to increase revenues so that they can invest in the SDGs, but tax avoidance, tax evasion and corruption are undermining countries’ efforts. Illicit financial flow (IFF) is the term that covers these activities (see Figure 1) that cross borders and reduce the availability of resources for financing sustainable development, including recovery from the COVID-19 pandemic. In the 2030 Agenda for Sustainable Development and the Addis Agenda, Member States committed to eliminate IFFs. Since 2015, they have taken many actions to boost transparency and combat IFFs, but there is more work to be done. Eliminating IFFs will require further actions across the sphere of national and global governance as well as international cooperation. Transparency about the actors in economic and financial matters is an essential component in the ability of country authorities to enforce the law, reduce corruption and ensure taxpayers pay all taxes that are due. Increasing the accuracy and transparency of beneficial ownership information is an important component of solutions for reducing tax avoidance and evasion and combatting corruption and money-laundering.

SDG progress has been set back, and the outlook faces uncertainty given the cumulative and amplified impacts of the COVID-19 pandemic, the war in Ukraine and climate change. This brief examines the channels through which these three shocks are impacting the SDGs and their implications for the achievement of the 2030 Agenda for Sustainable Development through recurrent crises. COVID-19 is estimated to have caused nearly 15 million deaths globally and brought the economy and people’s lives to a standstill for long periods in many parts of the world. The pandemic and the containment measures to control it significantly slowed economic growth, increased unemployment, raised poverty and hunger, widened inequality, and caused additional adverse impacts on women and children in many countries around the world. With uneven access to vaccines and treatments, and the continuing emergence of new variants, the pandemic continues to exert a malign influence on sustainable development.

The economic and societal implications that result from demographic change may have an impact on how certain generations or age-groups are perceived by the majority of the population or community. Often older family members or neighbours are respected and well integrated members of their community. They also often dispose of a considerable knowledge, experience and consumer power through life-long accumulated savings. Older persons are thus able to assist younger family members and their community with advice through gained experience. But in some cases older persons are faced with neglect and negative stereotypes. A displacement of older persons into segregated communities, an undervaluing of their contributions to society, and negative media portrayals, contribute to a decrease in face-to-face contact with older persons, foster the growth of a gap between generations and a general lack of empathy towards people of different age-groups.

In recent decades, all regions of the world have seen substantial progress in life expectancy at birth, which was estimated to be at 72.8 years in 2019 compared with 64.2 years three decades ago. As importantly, life expectancy has increased at all ages such that a person at age 65 in 2019 was likely to live 6.2 years longer than in the early 1950s (United Nations, 2022). But life expectancy differs significantly across countries and within them. Inequalities in health and in life expectancy across countries have received attention from the international community, which recognized that such inequalities are unfair and beyond an individual’s control. Assessing country-level inequality in life expectancy is therefore useful to examine whether outcomes in countries with high increases in life expectancy differ by their social and health policies. For instance, reducing inequality in life expectancy across countries points to the role that health policies play in controlling a wide range of diseases responsible for disparities in child and maternal mortality.

Population ageing in UNECE member States has given rise to fears that abuse of older persons may increase in its incidence, prevalence and complexity. Stereotypes may provide the breeding ground for abuse in society. Given the taboo attached to the topic, abuse and neglect are often underreported. Older people may be silent for fear of exposing a family member, losing services or being institutionalized. Therefore, there is a lack of reliable internationally comparable data to evaluate the phenomenon.

People in almost all countries are living longer. Globally, babies born in 2022 are expected to live 71.7 years on average, 25 years longer than those born in 1950. Rapidly ageing populations have increasing health and long-term care needs. As the forthcoming World Social Report 2023 discusses, however, today’s care and support systems for older persons are insufficient, requiring greater policy attention. The Covid-19 pandemic exposed existing weaknesses across countries in approaches to long-term care and showed how these weaknesses can aggravate inequalities. Poor quality and underfunded care facilities, insufficient provisions for care at home, low wages and precarious working conditions for paid care workers all contributed to increasing the already significant threat of Covid-19 for older persons (United Nations, 2020). The speed of change and the scale of the crisis have strengthened the call for fundamental reform of approaches to long-term care. Failure to do so will harm today’s older persons and those who care for them, as well as future generations of older persons.

In many UNECE countries the average actual retirement age is below the statutory retirement age, which means that the labour market is losing a great deal of resources in terms of experience and labour capacity of older workers. Ageing societies, however, cannot afford to lose the highly valuable resource of older workers. If there are people aged 55 years or older who want to work, but cannot due to unfavourable conditions in the labour market, UNECE member States may wish to address this issue.

Policy responses to population ageing to date have primarily focused on adapting welfare systems to the challenges of demographic change. Much less attention is being paid to the opportunities and potentials that living longer holds for individuals, economies and society at large, and to tackling the barriers that currently hinder their full realization. Perceiving longevity mainly as a fiscal pressure and an obstacle to economic growth may trigger reforms that result in rising inequalities. This can occur when the cumulative disadvantages stemming from difficulties in transitions over the life course, ill health and disability and unpaid caregiving are insufficiently addressed. It also feeds into age-based stereotypes and negative attitudes towards older people. To change this, it is essential to better recognize the potentials of ageing societies and to enable people to live active and fulfilling lives as they age.

The concept of volunteering has many aspects. Across the UNECE region there is no unified definition of volunteering in terms of pay, duration of activity, or content of work. In this context a clear distinction between regular employment and volunteering must be drawn, which must go beyond the mere presence or absence of remuneration. Benefits for volunteers need to be clearly outlined, e.g. training opportunities, social participation and inclusion, as well as other aspects. Older persons benefit from volunteering both as providers and as recipients. Promoting these activities is therefore in the interest of every government. Such promotion can be achieved by offering support to organizations and volunteers through the strategies outlined in this policy brief.

Rural and remote areas in many countries experience more pronounced population ageing than urban areas and subsequently, have a higher share of older residents. Lower population density and more geographically dispersed populations make it more difficult and expensive to create and maintain a comprehensive service infrastructure as common in urban areas. Consequently, rural populations have less access to services and activities and their situation may aggravate further when combined with poorer socio-economic conditions. This puts rural populations at a disadvantage compared to urban ones and can be particularly problematic for older people who may face a greater risk of social isolation, reduced mobility, lack of support and health care deficits as a result of the place in which they live.

Education is a key determinant of levels and trends of fertility, mortality and migration. In turn, coverage and investment in education are influenced by the rate of growth and the age structure of the population. Education and training over the life course are critically important to sustain socioeconomic development, especially in modern economies increasingly driven by innovation and productivity growth. From a macroeconomic perspective, a well-trained and well-educated workforce reinforces the positive impacts of the demographic dividend and tempers the fiscal and economic challenges associated with rapidly ageing populations, while contributing to the achievement of various Sustainable Development Goals and to the realization of the Vision Statement of the Secretary-General on Transforming Education. This policy brief summarizes some policy implications in these and other interlinkages between population, education, and sustainable development.

Public debt can be a powerful tool for development, enabling governments to finance critical expenditures and invest in a better future for their people. However, when public debt grows excessively or rapidly, it becomes a heavy burden, particularly for developing countries. This report highlights the alarming surge in global public debt, driven by cascading crises in recent years. The growing debt burden disproportionately impacts developing countries, as servicing it diverts essential resources away from their development aspirations. Recent events have worsened this challenge. The rise in global interest rates since 2022 further strained public budgets in developing countries. High interest payments are outpacing the growth in essential public expenditures such as health, education, and climate action. In the developing world, home to 3.3 billion people, one out of every three countries spends more on interest payments than on these critical areas for human development.

As the rate of new COVID-19 cases accelerates across the developing world, it exposes the potentially devastating costs of job losses and income reversals. Unconditional emergency cash transfers can mitigate the worst immediate effects of the COVID-19 crisis on poor and near-poor households that do not currently have access to social assistance or insurance protection. This paper provides estimates for a Temporary Basic Income (TBI), a minimum guaranteed income above the poverty line, for vulnerable people in 132 developing countries.

This paper explores new data on income inequality by the World Inequality Database, which corrects underreporting of income in the top deciles of the income distribution. We find that within all low- and middle-income countries, the bottom 40 income shares are much lower than we previously thought, while the top 10 income shares are much higher. Important for Sustainable Development Goal 10.1, the bottom 40 income shares have been growing at a much slower pace than estimated earlier and often at a lower rate than the top 10 shares. Demonstrating the value of improved datasets, this paper calls upon practitioners to have these enhanced data and metrics in their methodological toolbox.

As in many developing countries, in Mali, generating reliable and up-to date data beyond national averages to uncover geographic and other inequalities is one of the major challenges for rigorous monitoring of progress towards achieving the SDGs. Mali’s National Observatory for Human Development has set up a mechanism to generate socio-economic and poverty metrics for 703 municipalities based on the small area estimation procedure. The generated metrics shed light on poverty inequalities among municipalities while providing information on SDG acceleration integrated policies. This experience of data processing shows that existing data at the supra-communal level can be used to infer useful indicators that uncover the most deprived people, inform local development policies and offer reliable inputs for predictive modelling for anticipatory governance.

This policy brief focuses on the specific issue of disaster-response for three reasons. First, the disaster-response cycle describes a well-documented pattern of fiscal surge and a crowding out effect over much needed adaptation investments; second, climate vulnerability will only increase the volatility of this cycle in the future, threatening both the prospects for sustainable and inclusive growth as well as an increasingly untenable trajectory for fiscal sustainability; and third, because fiscal and financial capital flows to SIDS pose a challenge to the international financial architecture at large. The characteristics of the problem are known, as well as the size of the fiscal and financial burdens; this is a problem that would not be a problem if the incentives for public and private capital flows were aligned in the right direction. This presents a challenge for the multilateral system at large.

This brief examines how the women members of peace groups, established through a UNDP initiative in Iraq, overcame traditional barriers to play the role of peacemakers and social developers in their communities. From their perspective, the brief highlights the opportunities made available in post-conflict Iraq and identifies three realms that remained key in assuming their new roles in society: family dynamics, interactions with male community members and the media. Thus, it provides an understanding of the pathways through which women in traditional and conflict-affected societies like Iraq assumed the responsibility to rebuild their communities and initiate a structural shift in gender equality and social norms.

The pandemic has progressed differently across the world. Using monthly data on COVID-19 cases and fatalities, we evaluate whether income inequality is an important factor in explaining cross-country differences in the spread and mortality of the virus. The results show that income inequality is positively correlated with the number of COVID-19 cases. Higher income inequality is associated with a more rapid spread of the virus and an increase in the number of cases, indirectly increasing mortality rates as well. Also, higher levels of inequality are associated with reduced effectiveness of social distancing measures in containing new infections. Thus, elevated inequalities place societies in a more vulnerable position to confront this pandemic, and more unequal countries would need more robust public responses to contain the spread of the virus.

At any age, intersecting factors such as poverty, disability, social isolation and exposure to abuse can increase the risk of vulnerability and weaken resilience in the case of adverse events. The COVID-19 pandemic, rising inflation, natural disasters, and war are examples of adverse events that have disproportionately affected vulnerable persons, including many older persons. Often, the capacities and vulnerabilities of older persons remain invisible as their voices are less heard and their needs less known due to a lack of data and research, and their insufficient involvement in decision-making. A key challenge, therefore, is to inform, design and implement comprehensive policies that protect vulnerable older persons from adverse outcomes, enhance resilience and allow them to fulfil their full potential in later life. The policy strategies presented in this Policy Brief cover the areas of income and housing, health and long-term care, prevention of violence, abuse and neglect, and social participation as well as the importance of adequate data and research and the involvement of older persons in decision-making.

Paid domestic work employs many women in developing countries. Paraguay, where 94 percent of domestic workers are women and more than 90 percent of these jobs are informal, represents an extreme case of a problem that is common throughout the globe. These workers lack access to social security and generally endure precarious working conditions. What are the different legal, institutional, social and gender barriers that prevent domestic workers from having greater access to social security? Drawing on different sources of data from Paraguay, including the voices of both domestic workers and their employers, this study shows how persistently low levels of social security coverage in this sector are a product of complex interlocking factors: discriminatory cultural and gender beliefs, lack of accurate information and knowledge about social security, the low bargaining power of informal domestic workers and the low capacity for labour inspection that prevail in the sector. Based on these observations, the conclusions lay out guidelines to design integrated public policies for the sector’s formalization.

Twenty-five developing economies, the highest number since 2000, spent over 20 percent of their government revenues in 2022 on total external debt servicing. The average low-income country spends about 2.3 times more on interest payments than on social assistance. Due to the economic shocks during 2020-2023, we project that 165 million people fell into poverty using the $3.65-a-day poverty line—the entirety of those living in low- and lower-middle-income economies. A pause in debt payments would allow developing economies weighed down by debt to mitigate some social effects of these shocks, using resources earmarked for debt servicing. This policy brief presents simulations that show that the annual cost of mitigating the additional 165 million poor would reach US$14.24 billion, or 0.009 percent of global GDP and a little less than 4 percent of total public external debt service in 2022—if the income losses among the already poor prior to the shocks are also included, the mitigation cost would reach US$107.11 billion, or 0.065 percent of the world’s GDP and around a fourth of total external public debt service.

Sustainability-themed bonds are growing in popularity, including among development practitioners who view them as promising instruments in the delivery of more, especially climate, finance in developing economies. This UNDP Development Futures Working Paper provides an overview of the thematic bonds market and a discussion of issuer incentives as well as some of the main challenges related to additionality and credibility. To improve the potential of thematic bonds as a tool for sustainable and equitable development, the paper proposes five features that any official sector-supported model should prioritize. These features aim to deliver substantially lower funding costs for ‘green activities’ and improve market access as well as the credibility of bonds, which include strengthening issuer commitments to ambitious targets and incentives to implement climate-friendly policies. Finally, it is important to recognize the limitations of donor-supported models. High debt burdens in many countries limit the use of debt instruments, and these will compete for limited official sector funds with other, potentially fairer, means of delivering climate finance.

Population ageing is a global phenomenon, a shift towards an increasing share of older persons in the population. Even the least developed countries (LDCs) are beginning to experience the progressive ageing of their populations, and this process is expected to accelerate during the second half of the current century (United Nations, 2023). Despite its far-reaching consequences, the emergence of this trend in LDCs has attracted only limited attention from both national policymakers and the international community. Most LDCs are still early in the decades-long process of population ageing, which is a direct consequence of the demographic transition towards longer lives and smaller families. Population ageing begins with a slowdown in the growth of the younger population but eventually involves the rapid growth of the older population. Early in this process, countries have an opportunity to benefit from the demographic dividend – a faster rate of economic growth on a per capita basis due to an increasing share of the working age population (and thus a falling dependency ratio) caused by a sustained decline in the fertility level. Although temporary, this opportunity often lasts for several decades. It comes to an end once the older population begins to grow more rapidly, leading to a rising old-age dependency ratio. Preparing for population ageing in LDCs will be critical for achieving sustainable development and ensuring that no one is left behind. Maximizing the benefits from the demographic dividend will provide an opportunity for these countries to develop economically before their populations become much older. It is also consistent with a pledge of “working together to support the acceleration of the demographic transition, where relevant”, as agreed in the Doha Programme of Action for the Least Developed Countries for the Decade 2022–2031 (United Nations, 2022).

Converging crises such as the COVID-19 pandemic, the war in Ukraine, climate change and various conflicts, have become a defining challenge of our time. Crises that might have previously been contained within a specific geographic space are now propagated rapidly through globally interconnected systems and networks in areas such as economics, finance, the environment and health. This Policy Brief highlights the following: (a) converging crises have reversed and exposed the fragility of global SDG progress and imposed high costs on developing countries, (b) reducing inequality and poverty is critical to building resilience against the impact of shocks and crises, and (c) investment in the SDGs, particularly those that underpin social development, can help build resilience of developing countries to multiple crises, as seen in the case of the COVID-19 pandemic.

The COVID-19 pandemic has revealed an acute deficiency in care services, highlighting the unfair and unsustainable model on which the care system traditionally relies. Recent surveys indicate that more than three quarters (76.4%) of unpaid domestic care work worldwide is done by women, hindering their access to other opportunities. Simultaneously, increasing care needs due to rising dependency ratios are challenging the viability and sustainability of the traditional care provision system. To meet the growing care demand among the young, old, ill and disabled, societies must move away from such a system and invest in a sustainable care economy to provide affordable, high-quality care services while recognizing, reducing and redistributing (“3Rs”) the unpaid care burden borne by women. Besides emphasis on SDG 5, this policy brief focuses on opportunities and challenges in scaling a sustainable care economy to create new sources of fair jobs and reshape current economic and financial systems to make it more equitable, contributing to a broader range of SDGs, including SDG 1, 3, 4, 8, 10, 11 and more. While the research is built on data mostly from China, the findings may benefit a wide range of emerging economies with similar development contexts.