Oxfam: Asia can close its inequality gap through public services, but governments are underfunding them

Governments across Asia are underfunding the public services that could reduce inequality, leaving families to cover almost 38 per cent of all health spending out of their own pockets, nearly double the OECD average, finds a new Oxfam report released today.

The report, ‘Rigged from Birth: How inequality steals Futures in Asia & five public services’, examines five public services across Asia: care, social protection, health, education and digital access.

It finds that Asian governments invest 9.4 per cent of GDP in social protection, less than half the global average of 19.3 per cent, and 2.9 per cent in public education, below the 4 to 6 per cent international benchmark. In the region's most debt-distressed economies, countries spend between 7 and 25 times more on servicing debt than on protecting people.

"Public services are among the most powerful tools governments have to close the gap between rich and poor. But in many Asian countries, budgets are going towards debt repayments instead of clinics, classrooms and care. When the state steps back, families are forced to pay out of their own pockets, and the poorest pay the most. That is how inequality deepens," said Amitabh Behar, Executive Director at Oxfam International.

The findings on all five services:

● Health: Bangladesh invests under 1 per cent of GDP in public health, and households pay nearly 80 per cent of the total. In eight of the 22 countries studied, the share paid by households rose between 2016 and 2023: Bangladesh, Bhutan, Brunei, Cambodia, Malaysia, Mongolia, Nepal and Sri Lanka.

● Education: in China, the poorest households spend 56.8 per cent of their income on their children's education, while the richest spend 10.6 per cent. In Nepal, fees for some secondary schools equal around 28 per cent of consumption for the poorest fifth of households, against 8.3 per cent for the richest.

● Social protection: coverage ranges from 86 per cent of people in East Asia to 30 per cent in South Asia, and around seven in ten new mothers in South and Southeast Asia receive no maternity protection.

● Care: women and girls perform 80 per cent of unpaid care work in Asia. In Laos, 9 per cent of children from the poorest households attend early childhood education, against 67 per cent from the richest.

● Digital access: South Asia has the world's widest gender gap in mobile internet use, at 25 per cent, with around 330 million women not using mobile internet as governments move public services online.

Investments in public services have shown results. Across Asia-Pacific, every one-percentage-point increase in social protection spending reduces income inequality by 0.2 per cent, as measured by the Gini coefficient.

The report also highlights countries in the region that have narrowed the gap by investing in public services:

● Vietnam: Health and education account for more than 90 per cent of the inequality reduction achieved through tax and spending. That cuts the Gini by just over three points, and education alone delivers around two-thirds of it.

● Thailand: The Universal Coverage Scheme is credited with virtually eliminated income-linked gaps in infant mortality between provinces. After the reform, the poorest fifth of households spent around 0.9 per cent of their income on healthcare, against 1.5 per cent for the richest.

● India: Kerala's decentralized, community-led public health model delivers a life expectancy of 75.1 years and infant mortality of 5 per 1,000 births, far ahead of India's national averages.

"In these volatile times, governments cannot afford to cut public services as they protect people during price shocks, inflation and job losses. Governments must fund them through progressive taxation and adopt national plans to reduce inequality so that the growth this region is witnessing reaches everyone,” said Amitabh Behar, Executive Director at Oxfam International

Oxfam is calling on governments across Asia to:

1. Adopt time-bound National Inequality Reduction Plans, with regular monitoring.

2. Make free, universal public services the default, allocating at least 15 per cent of budgets to health and education with no public funds for for-profit providers.

3. Abolish user fees for essential services and cover the indirect costs of access, including medicines, transport and school materials.

4. Raise revenue through progressive taxes on high incomes, wealth and corporate profits, and resist externally imposed austerity conditionalities.

5. Recognize care as a public responsibility and make social protection a universal right.

6. Treat connectivity as a public service, with a free baseline of internet access for everyone and offline options kept open for essential services.

ENDS