World leaders meeting in Davos this week are likely to agree that inequality is a problem but unlikely to do anything about it, the head of the International Labor Organization said.
ILO Director-General Guy Ryder, speaking in Geneva before heading to attend the Alpine conference, said a feature of the annual meeting was the glaring gap between words and actions of participants over the issue.
“It's the lamenting, if you like, of this ill of inequality, and then an almost entire failure to consider the types of policies, or to consider seriously the types of action, that might reduce inequality,” he told a news conference in Geneva.
“There is a disconnect. There is a cognitive dysfunction,” Ryder said.
Ryder called it an example of the “strange behavior” exhibited by the elite participants at the annual conference. His spokeswoman intervened to ask reporters to keep that remark off the record but Ryder said he wanted to be quoted.
The Davos meeting attracts politicians and central bankers as well as over 1,500 business executives. The pre-Davos survey by the organizers, the Geneva-based World Economic Forum, almost invariably identifies growing inequality as one of the greatest risk factors in the global economy, Ryder said.
By next year, more than half the world's wealth will be owned by just one percent of the population as global inequality soars, the anti-poverty charity Oxfam said on Monday.
As well as contributing to social problems and potential unrest, inequality is a brake on growth and social mobility, Ryder said. “If people with talent can't get into positions to exercise that talent, there is a great deal of economic waste.”
Countries with higher inequality also find it harder to recover from economic crises, according to analysis by the ILO.
Ryder said governments should try to ensure workers shared in their employers' successes by supporting collective bargaining processes, minimum wages and tax policies.
That would reverse the trend in many developed countries, where average wages have stagnated since the financial crisis, as penny-pinching corporate budgets have failed to reward productivity increases, the ILO said last month.