World Economic Forum: Income inequality is biggest global risk

Worsening income inequality is the biggest risk to the world, the World Economic Forum said at its annual gathering in Davos, Switzerland. Attended by executives of the world`s top business executives and heads of states, the Davos forum is a meeting of the richest and powerful people with membership fee at 25,000 U.S. dollars. Putting income inequality as top global risk shows how serious the gap between rich and poor is worldwide. At an interview just before the meeting, International Monetary Fund Managing Director Christine Lagarde said, "In far too many countries, the benefits of growth are being enjoyed by far too few people. This is not a recipe for stability and sustainability."

The combined wealth of the world`s 85 richest people is equal to that of poorest 3.5 billion, half of the world`s population, said development charity Oxfam at the forum. The report found that the combined worth of the 85 richest people was 1.7 trillion dollars, and 60 million people who comprise the top 1 percent of income earners account for half of the world`s wealth. Chronic unemployment, unskilled workers, and young people in poverty can worsen social instability. Nobel laureate economist and Columbia University Professor Joseph Stiglitz wrote at his bestseller "The Price of Inequality" that the U.S.` political and economic systems are the cause of worsening gap between the rich and poor, and argued that the bottom 99 percent should be cared for the top 1 percent to benefit. New York Times columnist and Princeton University Professor Paul Krugman said income redistribution can`t be promoted just by market forces, adding inequality should be eased by tax reforms and welfare systems.

With increasing social consensus that income disparity is encroaching on economic growth and efficiency, business and political leaders are taking actions. At a New Year`s meeting, Japan`s three economic organizations urged Japanese companies to raise wage in line with their earnings growth. Japanese Prime Minister Shinzo Abe said, "Minimum wage increase is necessary to vitalize domestic demand." U.S. President Barack Obama and British Prime Minister David Cameron are also promoting a raise in minimum wage. Prime Minister Tony Abbott of Australia, the chair country of this year`s G-20 summit, proposed the World Economic Forum to block tax avoidance of multinational firms to use the resources to resolve income inequality.

Also in Korea, income is widening and the middle class is collapsing. Korea`s Gini coefficient, a measure of income inequality, ranked sixth among 34 member countries of the OECD, and is an upward trend. Statistics Korea`s survey released last year showed that 46.7 percent of Korean people consider themselves as low-income class. Youth employment stands at 39.7 percent, the lowest since related data started to be compiled in 1982. The government should give opportunities to vulnerable people to rebound through education, welfare and job creation measures. Preventing monopoly and fair competition should also be ensured to balance wealth.