Extra profits, the cost of living rises and meanwhile 722 large companies in the world collect an average of 1,000 billion dollars more a year

ROME – Over the past two years, 722 of the world’s largest companies have made, on average, nearly $1 trillion in excess profits a year, as the prices of consumer goods, food and energy soared along with interest rates, with a devastating impact on the cost of living for billions of people around the world. This is revealed by a new analysis by OXFAM And ActionAidwhich reviewed the companies in the ranking “global 2000” by Forbes, evaluating the extra profits made in 2021-22.

Excess profits, a sectoral view. Looking at data for specific sectors of the economy, the analysis reveals that 45 energy companies made an average of $237 billion a year in excess profits in 2021-2022. Well, if governments had taxed 90% of the extra profits made by fossil fuel operators and passed on to wealthy shareholders, they would have had enough resources to increase global investments in energy produced from renewable sources by 31%.

Cash records of banks, pharmaceuticals and food. Today, on the contrary, there are 96 billionaires in the world who have built their fortunes thanks to fossil fuels and can boast a total wealth of almost 432 billion dollars (50 billion more than in April last year). Food multinationals, banks, major pharmaceutical companies and major retailers have also seen their positions improve during the inflation crisis, which has driven 250 million people in 58 countries to starvation.

The price increase that kills. In the food and beverage sector, 18 giants made, on average, over 14 billion dollars a year in extra profits in the two-year period 2021-2022. A figure equivalent to more than twice the funding gap of 6.4 billion dollars essential to face the terrible food crisis which in East Africa – between Ethiopia, Kenya, Somalia and South Sudan – risks causing 1 in 28 people to die of hunger seconds in the coming months, also in the face of the drastic increase, of over 14%, in the prices of food products globally in 2022.

The “Uncle Scrooge” of weapons and drugs. In the pharmaceutical sector, 28 large companies recorded 47 billion dollars a year in excess profits, while 42 large retailers and supermarket chains recorded excess profits of 28 billion dollars a year, on average in the two-year period 2021-2022 . Nine of the largest aerospace and defense companies have made $8 billion a year in excess profits on average over the past two years, while 9,000 people die of hunger every day, largely due to conflict and war .

Growing Profits and “Greed Inflation”. The “profit problem” is emerging strongly in the current inflation crisis, especially in the European context. According to International Monetary Fund the increase in profits explains 45% of the increase in prices in Europe in 2022. Authoritative institutional figures, such as the President of the ECB, Christine Lagarde, have even gone so far as to fear the risk of a possible “greed inflation”. A term that refers to the attempt by some companies to opportunistically take advantage of inflation, raising prices well beyond the costs of production without surprising consumers given the general inflation.

The trick of passing costs on consumer prices. “Whether it’s greed or not, the bottom line is that companies have still managed to fully pass the increase in costs onto prices. – said Mikhail Maslennikov, policy adviser on tax justice and the fight against inequalities of Oxfam Italy – If in aggregate the profitability of companies is also proving to be constant, showing incredible resilience, the largest companies, in many sectors, benefiting from monopoly situations and increased demand, have seen a considerable increase in margins.

The real winners are them: the profits. It is undeniable that profits are today the real winners in the distributional conflict, while wages – which change less quickly than prices, reflecting the delays in renewals and the contractual weakness of workers – are among the losers. The outcome is deeply unfair with only one category, the workers, left to bear the brunt of the high price crisis. – And it is also profoundly inefficient, given that wages fuel the demand for goods and services of the companies themselves”.

The collapse of the real wages of those who work. According to the estimates of oxfam, one billion workers in 50 countries experienced an average pay cut of $685 in 2022, resulting in an overall decline, in real terms, of $746 billion in the wage bill. Not all “workers” have seen their wages fall amid the inflation crisis: in 2022 the highest paid CEOs in four countries (India, the United Kingdom, the United States and South Africa) saw their salaries grow by 9% in terms real, while workers’ wages fell by 3%. In Italy, again in 2022, the fall in real wages reached 7.6%.

The tax on extra profits should be extended. In such a context, oxfam And ActionAid they are once again asking governments to urgently introduce an extraordinary tax on extra profits or to extend it, where it is implemented only for some sectors, to all sectors of the economy. For just the 722 companies analyzed, a tax rate between 50% and 90% could bring into the public purse between 543 and 978 billion dollars for 2021 and between 430 and 774 billion dollars for 2022. Resources that could be used in part in rich countries to help the most vulnerable segments of the population to cope with increases in food costs and domestic utilities and, in part, be made available to developing countries to guarantee essential services such as health care or for adequately address the impact of the climate crisis.

Other uses of the collected resources. The resources could, in particular, be used to: finance with 400 billion dollars the Fund for the losses and damages caused by climate change, established at COP27 last year, taking into account that low- and middle-income countries may have to face, by 2030, costs of up to $580 billion annually related to extreme weather events; support low- and middle-income countries with $440 billion needed to ensure social protection and universal health care for more than 3.5 billion people; fill the US$148 billion funding gap to ensure access to pre-primary, primary and secondary education in low- and middle-income countries. An intervention that would support the recruitment of millions of new teachers, nurses and health workers throughout the global South.

“Enough is enough. Governments must not allow big corporations and the super rich to profit from people’s suffering – added Arthur Larok, secretary general of ActionAid – the common good must not be put in check by the interests of a privileged few. The taxation of extra profits is a prudent political choice: it is a source of predictable resources capable of contributing to socio-economic development and the mitigation of costs deriving from climate change in the most vulnerable contexts on the planet. A far more effective measure than the granting of loans to poor countries, now subjugated by unsustainable debts”.