Goal 10: Reduced inequalities
Lao PDR's growth in consumption has benefited the richer quintiles more than the poorer segments of the population, and the rural-urban gap remains significant. Inequality has increased, notably within urban areas. Policies and measures to increase the access of the most vulnerable groups to services, livelihoods and resources need to be much more explicit and better targeted. The country also needs to scale up social protection systems rapidly to achieve significant coverage of the poor.
An analysis by rural and urban areas showed that inequality had decreased in rural areas between 2007 and 2013 (due to a slowdown of growth in incomes of the rural non-poor population). However, this was more than offset by rising inequality in urban areas. Inequality has therefore increased within urban areas, and between rural and urban areas. Although the poor of Lao PDR have become better off in real terms over the past two decades, the rich have benefited more, in both proportionate and absolute terms. A report shows that the increased inequality slowed down the pace of poverty reduction. If inequality had not increased, a greater extent of poverty reduction would have been achieved nationally.
The rural-urban gap remains significant at 18.6 percentage points. The poverty rate in rural areas is 2.9 times that of the urban areas. From 1992/93 to 2007/08, the decline in rural poverty has been slightly faster than the decline in urban poverty. However, in the five years’ period from 2007/08 to 2012/13, rural poverty rates declined much slower (by 9.8 percent), while urban poverty declined by 42.5 percent. The reversal in trend has been correlated with agricultural produce prices.
The progress in poverty reduction varies by altitude and location. One-third of the population in upland areas is still below the poverty line, while in lowland areas, about one-fifth of the population is poor (18.8 percent).
Ethnicity and education also play determinant roles. The Lao-Tai, with the highest levels of education, have the lowest poverty rates, continuing the trend of the previous two decades. In contrast to previous trends, the poverty rate among the Chine-Tibetan group has declined dramatically (from 42.2 percent in 2007/8 to 16.4 percent in 2012/13), and is catching with the Lao-Tai (15.4 percent). Poverty remains high among the Mon-Khmer and Hmong-Lu Mien, at 42.3 percent and 39.8 percent respectively. The Mon-Khmer group has the highest poverty rate, but poverty is declining faster in this group than among the Hmong-Lu Mien. One analysis attributes the different patterns to the lower levels of education among the non Lao-Tai groups. The poverty headcount rate is much higher among households where the household head has no education (41.7 percent) or only some primary education (32.4 percent). Non Lao-Tai groups traditionally live in upland or more remote areas difficult to access, and this factor is important, since location and access affect education and livelihoods.
Inequalities have to be reduced also between men and women. Achieving gender equality will require actions on three fronts. First, the implementation and monitoring of national gender equality laws, policies and instruments need strengthening and the political role of gender-related institutions upgraded. Second, interventions that empower women and girls should be prioritized in terms of resources and planning. These include, for example, preventing adolescent pregnancies and early marriage, educating girls and promoting small and medium enterprises run by women. Third, multi-sector programmes are needed to combat violence against women.
Income inequality is on the rise—the richest 10 percent have up to 40 percent of global income whereas the poorest 10 percent earn only between 2 to 7 percent. If we take into account population growth inequality in developing countries, inequality has increased by 11 percent.
Income inequality has increased in nearly everywhere in recent decades, but at different speeds. It’s lowest in Europe and highest in the Middle East.
These widening disparities require sound policies to empower lower income earners, and promote economic inclusion of all regardless of sex, race or ethnicity.
Income inequality requires global solutions. This involves improving the regulation and monitoring of financial markets and institutions, encouraging development assistance and foreign direct investment to regions where the need is greatest. Facilitating the safe migration and mobility of people is also key to bridging the widening divide.