Groundxero | 8 July, 2023
A joint study conducted by Oxfam and Action Aid shows that 722 of the world’s top corporations made combined windfall profits of $1 trillion per year in 2021 and 2022 as people across the planet struggled to meet basic needs due to rising prices of food and fuel. Oxfam and ActionAid found that these world’s top Big companies, which includes giants in energy, food, banking, pharmaceuticals, etc., raked in USD 1.09 trillion in windfall profits in 2021 and USD 1.1 trillion last year. The study notes that the rates of profits of the said companies in 2021 and 2022 was on average 89% higher than the average profits made by them in the previous four years in 2017-2020.
The annual profit figure of over $1 trillion in two successive years is higher than the GDP of a majority of countries in the world, and reflects an “obscene” and “immoral” quest for higher profits by the capitalists, who have exploited the global crisis of energy and food price inflation in the last two years caused by multiple factors including the COVID-19 pandemic and the war in Ukraine. While corporate profit soared, one billion workers across 50 countries took a USD 746 billion real-term pay cut in 2022.
The study recommends that governments must impose permanent windfall taxes on these excessive profits across all sectors and use the money raised to carry out social security programs to tackle a range of issues including the cost of living crisis, poverty, hunger, and climate change.
The study by Oxfam and ActionAid is based on the calculation of data published by Forbes magazine about the world’s top 2,000 companies, and for this analysis, windfall profits has been defined as those exceeding average profits [of these companies] in 2017-2020 by more than ten percent.
According to the findings of the study,
- 45 energy corporations made on average USD 237 billion a year in windfall profits in 2021 and 2022, which created 96 new energy billionaires.
- As per the study, at a time “when 9,000 people die of hunger every day,” 18 global food and beverages companies recorded an average of USD 14 billion in windfall profits in 2021 and 2022. The windfall profits of leading food and beverage companies in 2021 and 2022 would be “enough to cover the USD4 billion funding gap needed to deliver life-saving food assistance in East Africa more than twice over,” Oxfam and ActionAid noted.
- The study also noted that 42 major retailers and supermarkets made an average windfall profit of over USD 28 billion; 28 pharmaceutical companies earned an average of USD 47 billion in 2021 and 2022; 9 aerospace and defense enterprises earned an average of USD 8 billion.
- Huge corporate profits have coincided with the degradation of pay and conditions for workers. Oxfam estimates that top-paid CEOs across four countries enjoyed a real-term 9 percent pay hike in 2022, while workers’ wages fell by 3 percent.
- One billion workers in 50 countries took an average pay cut of USD 685 in 2022, a collective loss of USD 746 billion in real wages compared to if wages had kept up with inflation.
- Extreme wealth and extreme poverty have increased simultaneously for the first time in 25 years.
People are sick and tired of corporate greed. Global food prices rose more than 14 percent in 2022 and Oxfam estimates that one person is likely to die of hunger every 28 seconds across Ethiopia, Kenya, Somalia and South Sudan. Government policy should not allow mega-corporations and billionaires to profiteer from people’s pain. Oxfam’s interim executive director, said in a statement. “It’s obscene that corporations have raked in billions of dollars in extraordinary windfall profits while people everywhere are struggling to afford enough food or basics like medicine and heating.” Oxfam and ActionAid argued that governments should “claw back gains driven by profiteering” by imposing a 50-90% windfall tax on the profits of major corporations—and invest that money back in helping people and deterring future profiteering. They must put the interests of their great majorities ahead of the greed of a privileged few.