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Pandemic profits for companies soar by billions as poorest pay price – Oxfam

Pandemic profits for companies soar by billions as poorest pay price – Oxfam

September 9, 2020
Some corporations are cashing in on Covid-19 on behalf of the wealthiest

Thirty-two of the world’s largest companies stand to see their profits jump by more than $109 billion in 2020 as the Covid-19 pandemic lays bare an economic model that delivers profits for the wealthiest on the back of the poorest, according to a new Oxfam report today.

Power, Profits and the Pandemic, published ahead of tomorrow’s six-month anniversary of the declaration of the pandemic, also outlines how COVID-19 has made things even worse by encouraging corporations around the globe to put profits before workers’ safety, push costs and risks down the supply chain and use their political influence to shape policy responses.

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 Organization estimates that more than 430 million small enterprises are at risk.

Meanwhile, the protection given to shareholders has fuelled a share price boom. The top 100 stock market winners have added more than $3 trillion to their market value since the pandemic. As a result, the 25 richest billionaires have increased their wealth by staggering amounts. 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.

Oxfam International Executive Director Chema Vera said: “COVID-19 has been tragic for the many but good for a privileged few. The economic crisis we are suffering because of the pandemic has been fuelled by a rigged economic model. The world’s largest corporations are making billions at the expense of low wage workers and funnelling profits to shareholders and billionaires – a small group of largely white men in rich nations.

“It is sickening that, in the middle of a pandemic, some corporations are paying-out massive dividends to wealthy shareholders having received government bailouts meant to protect jobs. Scarce resources are being handed to the already super wealthy at a time when hundreds of millions of people are suffering the consequences of this pandemic. Women, racial and ethnic minorities or migrants are being significantly impacted.”

The report outlines how corporations have exacerbated the economic impacts of the pandemic by funnelling profits to shareholders instead of investing in better jobs and climate-friendly technology, paying their fair share of taxes, and prioritizing profits over people. The report sets out examples including:

  • 10 of the world’s largest apparel brands paid 74 per cent 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 Canada, at least 170 of Canadian buyers sourcing from Bangladesh either delayed, put on hold or cancelled their orders since the onset of COVID-19. Globally, at least 1931 brands cancelled, delayed or held orders with the total value of these orders around $3.7 billion. The drop in orders to factories is affecting 2.26 million workers and over one million garment workers in Bangladesh have already have been fired or furloughed, yet Canadian brands are still reporting profits.
  • 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.
  • Mining operations in Peru have been kept open despite high risks of infection among their employees.
  • Chevron announced cuts of 10-15 per cent 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.

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.

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 per cent of earnings.

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 re-balance corporate purpose, profits and power away from exclusively benefiting executives and shareholders towards workers, suppliers, consumers and communities. A corporate reform agenda should 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 must rein in corporate power to stop them from rigging the rules.

Vera said: “We are at a critical juncture. We have a choice between returning to ‘business as usual’ or learning from this moment to design a fairer and more sustainable economy.”

“Some of the captains of capitalism have jumped on the bandwagon and promised to move away from a shareholder first model. This talk is cheap. The pandemic must be the catalyst for reining in corporate power, restructuring business models with purpose and rewarding all those that work with profits, creating an economy for all.

“Unless we change course, economic inequality will increase. Now is the time to shore up small businesses, workers and democratic institutions – not an even smaller number of large corporations that are exerting greater economic and political power.”

– 30 –

Notes to editors:

  •  Power, Profits and the Pandemic is available here
  • The 32 companies expected to make additional profits of $109bn in 2020 are listed in the table below. The table lists annual average profits and dividend pay-outs for the period 2016-2019, and 2020.
  • Jeff Bezos is the founder and owner of Amazon. Amazon’s market capitalization is over $1.5tn and Jeff Bezos is now the richest man on earth worth around $200bn. His wealth has increased with $92 billion in only five months, between 18 March and 20 August 2020. Bezos could have paid each of Amazon’s 876,000 employees a $105,000 bonus and would still be as wealthy as he was at the onset of the pandemic. Invested over 25 years at 6 per cent interest rate this bonus would increase to $450,000 in retirement savings for each employee.
Company Industry HQ country Net profits:

AVG FYs 2016-2019

Net profits:

FY 2020 (TTM)

Pre-Pandemic Profit Margin Pandemic Profit Margin Excess Pandemic Profits Pandemic Profits Tax liability Shareholder Payout Ratio: Median FYs 2016-2019 Shareholder Payout Ratio: FY2020 (TTM*)
Microsoft Tech US 25.46b 44.28b 25% 31% 18.82b 17.63b 112% 86%
Intel Tech US 15.50b 23.66b 23% 30% 8.16b 7.48b 84% 75%
Apple Tech US 52.21b 58.42b 22% 21% 6.22b 7.03b 120% 154%
Walmart Retail US 11.22b 17.90b 2% 3% 6.68b 6.88b 126% 49%
UnitedHealth Healthcare US 10.85b 17.10b 5% 7% 6.25b 6.45b 58% 41%
Facebook Tech US 16.69b 23.52b 34% 31% 6.83b 6.08b 34% 33%
Google Tech US 24.30b 31.53b 19% 19% 7.23b 5.93b 34% 86%
BHP Mining AUS 3.16b 7.96b 8% 18% 4.80b 4.71b 138% 88%
Nestlé Consumer goods CH 9.77b 14.28b 11% 15% 4.51b 4.62b 136% 130%
Merck & Co Pharmaceutical US 5.59b 10.48b 13% 22% 4.88b 4.23b 224% 92%
CVS Health Healthcare US 4.49b 8.26b 2% 3% 3.76b 3.79b 109% 33%
Amazon Retail US 6.77b 13.18b 3% 4% 6.41b 3.52b 0% 0%
Procter & Gamble Consumer goods US 9.87b 13.03b 15% 18% 3.16b 3.47b 128% 117%
Visa Finance US 8.77b 11.75b 46% 51% 2.99b 3.25b 108% 97%
Cisco Systems Tech US 8.02b 11.21b 16% 23% 3.19b 2.93b 170% 84%
Johnson & Johnson Pharmaceutical US 12.06b 15.19b 15% 19% 3.12b 2.69b 108% 96%
Home Depot Retail US 9.74b 11.83b 10% 10% 2.09b 2.45b 123% 96%
Roche Pharmaceutical CH 10.72b 13.68b 18% 21% 2.96b 2.34b 75% 75%
Oracle Tech US 8.29b 10.14b 21% 26% 1.85b 1.69b 252% 227%
Deutsche Telekom Telecom DE 3.45b 4.27b 4% 5% .82b .94b 76% 92%
Reliance Industries Energy IN 5.09b 5.62b 8% 8% .53b .75b 9% 12%
ASML Tech NL 2.50b 3.25b 23% 23% .75b .65b 61% 64%
MTN Group Telecom ZA .35b .95b 3% 10% .60b .59b 207% 60%
AbbVie Pharmaceutical US 6.21b 6.96b 21% 19% .75b .58b 134% 106%
Novo Nordisk Pharmaceutical DK 5.83b 6.25b 34% 33% .43b .51b 92% 86%
Telecom Italia Telecom IT .67b 1.17b 3% 6% .51b .51b 26% 37%
Crédit Agricole Group Finance FR 7.21b 7.23b 21% 21% .02b .36b 28% 0%
AngloGold Ashanti Gold ZA -.00b .30b 0% 8% .30b .28b 72% 24%
Tata Consultancy Tech IN 4.06b 4.13b 22% 20% .08b .26b 69% 84%
Power Grid Corporation of India Energy IN 1.19b 1.40b 28% 28% .21b .26b 28% 42%
Pfizer Pharmaceutical US 13.99b 14.17b 27% 29% .18b .23b 137% 58%
BUA Cement Industrial NG .12b .17b 41% 35% .05b .05b 6% 8%
For more information or to arrange an interview please contact:

Paula Baker
Media Relations
Oxfam Canada
(613) 240-3047

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