A new Oxfam report has shown that 32 of the world’s largest companies stand to see their profits jump by $109 billion more in 2020.
The report said that the COVID-19 pandemic has laid bare an economic model that delivers profits for the wealthiest on the back of the poorest.
The report published by Oxfam titled Power, Profits and the Pandemic, outlines how COVID-19 has made things even worse by encouraging corporations around the globe to put profits before workers’ safety, push costs and risks down the supply chain and use their political influence to shape policy responses.
According to the report, “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 outset 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.
“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.
The report also outlined how corporations have worsened 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.
The report setout examples including: “In the US, an estimated 27,000 meat packing workers have tested positive ―one in nine employees― and more than 90 have died from COVID-19. The country’s largest meat processing company, Tyson Foods, published a letter advocating against closing its factories, despite 8,500 of its employees testing positive for the virus.
“Ten of the world’s largest apparel brands paid 74% of their profits (a total of $21 billion) to their shareholders in dividends and stock buybacks in 2019. This year 2.2 million workers in Bangladesh alone were affected when textile orders were cancelled. Factory shutdowns have lowered revenues in the country by an estimated $3 billion.
“In India, hundreds of tea plantation workers, many of them women, have gone unpaid as a result of the Covid-19 lockdown. At the same time, some of the largest Indian tea companies have boosted their profits or have been able to maintain profit margins by cutting costs.
“Mining operations in Peru have been kept open despite high risks of infection among their employees.
Chevron announced cuts of 10-15% of its 45,000 global work force despite spending more cash on dividends and share buybacks during the first quarter of the year than they generated from core business.
“Nigeria’s largest cement company, Dangote Cement, allegedly fired more than 3,000 staff without prior notice or due process while the company is still expected to pay 136% of its profits to shareholders in 2020.”
Reacting to the report, Oxfam International Executive Director, Chema Vera, said: “Covid-19 has been tragic for the many but good for a privileged few. The economic crisis we are suffering because of the pandemic has been fuelled by a rigged economic model. The world’s largest corporations are making billions at the expense of low wage workers and funnelling profits to shareholders and billionaires – a small group of largely white men in rich nations.
“It is sickening that, in the middle of a pandemic, some corporations are paying-out massive dividends to wealthy shareholders having received government bailouts meant to protect jobs. Scarce resources are being handed to the already super wealthy at a time when hundreds of millions of people are suffering the consequences of this pandemic. Women, racial and ethnic minorities or migrants are being significantly impacted.”
“Oxfam is calling for a response to the immediate crisis that priorities straight 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.
“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. A corporate reform agenda should 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.
Mr Vera 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.”
“Some of the captains of capitalism have jumped on the bandwagon and promised to move away from a shareholder first model. This talk is cheap. The pandemic must be the catalyst for reining in corporate power, restructuring business models with purpose and rewarding all those that work with profits, creating an economy for all.
“Unless we change course, economic inequality will increase. Now is the time to shore up small businesses, workers and democratic institutions ―not an even smaller number of large corporations that are exerting greater economic and political power.”