THE BLOG
01/22/2013 02:31 pm ET Updated Mar 24, 2013

Breaking Down the Walls of Inequality

The wall of inequality must be taken down if we are to make the world a decent place to live, with an economy built on values of fairness and humanity, rather than injustice and greed. That is a message the global unions are delivering to Davos. Because inequality is destroying our prospects for growth, our businesses, communities, and individual lives. This week the ILO announced that 4 million more people lost their jobs in 2012 and forecasts 8 million more losses by the end of 2014. Nearly 13 percent of under-24s are unemployed.

We are living in a world of record levels of inequality fueling the problem of demand in our economies, especially in the U.S and Europe. This is fact now recognised by global institutions such as the IMF, the World Bank and the OECD. The World Economic Forum has cited wage inequality as the most significant prevalent global risk facing us and Oxfam has urged that inequality be brought back at least to 1990 levels by 2025 to save the planet. 1990 was a year when one gigantic political wall came down but another invisible wall between the majority and the super-rich had already been under construction for a decade. The "greed is good" mantra of the 80s has continued unabated for 30 years. Nor did it go out of style when the financial crisis hit, rather the gap between the 1 percent and the rest has grown wider during the last five years. Overall since 1980 the top 1 percent in the U.S. has seen its share of national income double and the UK has passed back into Dickensian levels of inequality. The incomes of the top 1 percent have increased 60 percent in twenty years globally.

Where does that leave us today? On one side of the wall lies trillions of dollars of capital controlled by less than 1 percent of the world's population and on the other everyone else scrimping and saving to survive albeit to different levels. The situation has passed from unsustainable to catastrophic. The world needs a pay raise: those trillions of dollars have to be invested in growth and growth starts by investing in a company's most valuable asset -- its people. Workers' wages have stagnated and there has been a steep decline in purchasing power and a rupture between wages and productivity.

No magic is needed from Davos Man this week: only to heed the united warning coming from global institutions, labour leaders, ngos and business leaders that inequality is a pernicious force destroying our ability to recover from the crisis. No magic required -- only the return of active labour market institutions coupled with a return to strong collective bargaining and a fairer deal that lifts all the boats. We must champion trade union growth and ensure that collective bargaining becomes the norm not the exception. The unions are part of the solution because they know how to break down inequality. Government and business leaders must join with union leaders in the struggle to beat the crisis and create a more socially inclusive world.

In just over twenty years, we have seen convulsions for democracy across the world -- from the fall of the Berlin Wall to Tahrir Square. We are making progress in terms of the emancipation of people and democracy. But what we are also seeing is a corruption of this spirit by a neo-liberal business community and their political friends who have lost perspective. Business must change tack and reset their moral compass to social responsibility. Financial market short-termists are happy to keep building up the wall of inequality. It's up to the rest of us to tear it down. It might sound a tall order but then not many thought the Berlin Wall could be toppled -- and look what happened there.