Cost of living crisis could turn into catastrophe with 860m people at risk of extreme poverty - Oxfam

860 million people could fall into extreme poverty by the end of this year.
860 million people could fall into extreme poverty by the end of this year. Photo credit: Getty Images

With the cost of living crisis being amplified by COVID-19 as well as the war in Ukraine, a worldwide development organisation is warning the crisis could turn into a catastrophe. 

Oxfam has released a new brief revealing that 860 million people could fall into extreme poverty by the end of this year, calling for urgent action to tackle this trajectory. 

"Without immediate radical action, we could be witnessing the most profound collapse of humanity into extreme poverty and suffering in memory," Oxfam International executive director Gabriela Bucher said.

The World Bank defines extreme poverty as living on less than US$1.90 a day which equates to just under NZ$2.80.

The worldwide confederation of charities that focuses on global poverty said COVID-19 and rising food prices due to Russia's invasion of Ukraine are supercharging food prices and causing global inequality to spike.

Bucher said many people worldwide are having to choose between eating, heating or medical bills as they struggle with the sharp cost of living increases, as the brief estimates global food prices alone will push 65 million more people into extreme poverty.

The brief notes that people in poorer countries are being hit harder, with rising food costs accounting for 17 percent of consumer spending in wealthy countries while in poorer countries it accounts for as much as 40 percent.

Oxfam found a wave of governments are nearing a debt default and have been forced to slash public spending to pay creditors and import food and fuel. It is calling for countries to cancel all debt payments for developing countries that require urgent help, which would free more than US$30 billion in funds for 33 countries.

Oxfam is also calling for a Global Fund for Social Protection to be created to help the poorest countries provide essential income security for their populations. 

"Now more than ever, with such scale of human suffering and inequality laid bare and deepened by multiple global crises, that lack of will is inexcusable and we reject it. The G20, World Bank and IMF must immediately cancel debts and increase aid to poorer countries, and together act to protect ordinary people from an avoidable catastrophe," Bucher said.

"The world is watching."

Billionaire wealth skyrockets

The brief also notes that despite COVID-19 costs pilling up for countries, billionaire wealth has risen more since the pandemic than in the previous 14 years combined.

"This terrifying prospect is made more sickening by the fact that trillions of dollars have been captured by a tiny group of powerful men who have no interest in interrupting this trajectory," Bucher said.

Oxfam found that an annual wealth tax on millionaires starting at just 2 percent and 5 percent for billionaires would generate US$2.52 trillion a year, which is enough to lift 2.3 billion people out of poverty, make enough COVID vaccines for the world and deliver universal health care for low-income countries.

The charity also found an extra tax for just 32 super-profitable multinational companies could have generated $104 billion in revenue in 2020.

"We reject any notion that governments do not have the money or means to lift all people out of poverty and hunger and ensure their health and welfare. We only see the absence of economic imagination and political will to actually do so," Bucher said. 

Oxfam is calling to introduce a one-off and permanent wealth tax to fund recovery from COVID-19 and introduce an excess profit tax for large multinational companies.