Thirty-two of the world’s largest companies stand to see their profits jump by $109 billion more in 2020, according to a new Oxfam report which highlights that Covid-19 has exacerbated existing inequality with the most vulnerable losing out.
Power, Profits and the Pandemic outlines how many corporations around the globe – including those bailed out by governments – have put profits and pay outs to shareholders before jobs and workers’ safety and have pushed costs and risks associated with Covid-19 down their supply chains. The pandemic was declared almost six months ago on March 11.
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.
Meanwhile, pay outs to shareholders have been protected fuelling a share price boom which has in turn massively increased the wealth of the richest. The figures are staggering:
- The 25 most profitable global corporations in the S&P Global 100 Index are expected to pay shareholders over $378bn in 2020 – equivalent to 124% of their profits
- The top 100 stock market winners have added more than $3 trillion to their market value since the pandemic.
- Jeff Bezos could personally pay each of Amazon’s 876,000 employees a one-time $105,000 bonus today and still be as wealthy as he was at the beginning of the pandemic.
- Chemicals giants BASF was given £1bn as emergency loans from the UK government yet in June approved a plan to pay out €3.03bn in dividends, an increase from the previous year, despite falling profits.
An excess profits tax on the 32 most profitable companies could raise an estimated $104bn to address COVID-19. This would be enough to pay for COVID-19 testing and vaccines for everyone on the planet with $33bn left over.
Danny Sriskandarajah, Oxfam GB chief executive, said: “This pandemic has exposed the sickness at the heart of the global economy, with companies prioritising profits over people. A fortunate few are cashing in on Covid while hundreds of millions of working people are left to struggle.
“It is barely believable that, in the middle of a pandemic, scarce resources are going overwhelmingly to the already super wealthy. The consequences are deadly serious for hundreds of millions of people who are hurting as their jobs disappear, their hours are cut, or their employers fail to put in place basic safety precautions.
“In these extraordinary times, those who have been fortunate enough to profit from the pandemic have a responsibility to contribute towards vital healthcare, social safety nets and measures to boost economic recovery.”
The report sets out numerous examples where companies have put lives and livelihoods at risk in pursuit of profit:
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 $3bn.
- 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.
Oxfam finds that many companies’ ability to cope with the economic damage wreaked by the pandemic and take care of their employees has been severely undermined by years of increased payments to shareholders; some companies having handed over amounts significantly greater than their profits. It warned that government’s ability to respond to Covid-19 had been undermined by tax dodging.
From 2016 to 2019, 59 of the world’s most profitable companies in the US, Europe, South Korea, Australia, India, Brazil, Nigeria and South Africa distributed almost $2 trillion to their shareholders, with pay-outs averaging 83% of earnings. The three largest healthcare companies in South Africa – Netcare, Mediclinic and Life Healthcare Group – paid out a staggering 163% of their profits to shareholders through dividends and share buy-backs.
Oxfam is calling for a response to the immediate crisis that prioritizes 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 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 need to rein in corporate power to stop them from rigging the rules.
Sriskandarajah said: “If we are to protect the poorest and prevent the gap between rich and poor growing ever wider then we need companies that work in the interests of society rather than the other way around.”