Is the Middle Class in Tunisia Failing?
14 April 2015
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The emergence of a stable middle class is a development indicator, and its growth is associated with a faster reduction in poverty rates. The size and purchasing power of the middle classes in developing countries increase when these countries record high growth rates. But, on the other hand, the expansion of the middle class is considered the engine of the economic development and growth recorded.
The middle class has been the driving force behind economic growth in Tunisia over the past four decades. It boosted consumption, which facilitated the development of a local industry. It acquired a significant level of education and know-how, which allowed for fairly easy adaptation of some new technologies by the local industry. This economic growth has been accompanied by a reduction in poverty and an improvement in living conditions(1).
Nowadays, the dynamic created by the middle class is stalling. There is unemployment among young graduates from this class and a decline in their purchasing power, following the emergence of new expenses (health, education), despite the increase in their total spending between 1985 and 2010. This new malaise is even considered by political scientists as one of the causes of the rapid fall of the old regime in Tunisia!
There is increasing concern about a backlash and a possible loss of the gains of this class, which would lead to a slide into poverty.
However, in order to help this class, it is necessary to identify it properly. Adequate targeting also requires taking into account the various aspects characterizing the dynamics of the middle class.
Several definitions are put forward. However, they refer to different conceptions of the needs, aspirations, and roles of the middle class. We therefore extend our analysis to address sources of income, as well as the acquisition of durable goods by middle-class families. Finally, we highlight some obstacles to the dynamics of the middle class, and then propose policies to revive this dynamic.
Lack of consensus on the definition of the middle class
In order to facilitate the identification of middle-class households, most international organizations rely on the monetary income levels of households. However, since these definitions refer to different underpinnings of the needs of the middle classes, very different income ranges are obtained. Thus, we go from an income per person per day between US$2 and US$13 for the World Bank (WB), between US$2 and US$20 for the African Development Bank (AfDB), and between US$10 and US$50 for Western countries.
Other studies consider a definition based on the relative income of the middle class. Thus, the United Nations Development Programme (UNDP) classifies as middle class any household whose per capita income is between 50% and 150% of the national median income.
The use of a definition based on nominal or relative income level is not obvious for a study concerning Developing Countries (DCs). In these studies, we are forced to rely on the declarations made by the household on its income, while it is difficult to verify the veracity of these declarations. Households tend to underestimate their income for various reasons.
New procedures for identifying middle classes are no longer limited to household income levels, especially if the objective is to propose economic and social policies for the benefit of this class. An important criterion for understanding the nature of the middle class is to see how the head of household generates his income. “Nothing seems more middle class than the fact of having a steady well-paying job”, estimate Banerjee and Duflo in their study on the middle class.
This new definition, based on the opportunity to access a job, has even conditioned the form of economic policies towards the middle class. A recent report by the International Monetary Fund (IMF) on Arab countries puts forward the slogan: “subsidies for the poor and decent jobs for the middle class”. It draws attention to the fact that middle-class households in Arab countries do not need subsidies or social assistance, but “they want good quality jobs and business opportunities that empower them to flourish on their own”.
In a recent study, ESCWA (United Nations) also specifies that the problem of identifying the middle class is complex since the quantities and qualities of products consumed must be considered. In addition, a set of social attributes must be considered in addition to the levels of economic well-being of any household. Sociologists consider that members of middle-class households manage to meet their basic nutritional needs. Unlike the poor, they are not limited to quantities; they aspire to a better quality to satisfy psychological needs.
Evolution and characteristics of the middle class in Tunisia
* Evolution of the middle class between 1985 and 2010
We adopt a definition similar to that of the AfDB, but distinguishing only four classes: the poor (having less than US$2 per person per day), the lower middle class (between US$2 and US$4), the stable middle class (between US$4 and US$10), and the upper class of the rich(2). Graph 1 shows the distribution of the population between these four classes and reveals a significant decrease in poverty and the lower middle class between 1985 and 2010. Several poor households and those in the lower middle class have rejoined the stable middle class. In addition, several middle-class households have joined the upper class (Rich). The share of the stable middle class increased from nearly one-third of the population in 1985 to more than 50% in 2010.
Read the rest of the article on Kapitalis.com
The middle class has been the driving force behind economic growth in Tunisia over the past four decades. It boosted consumption, which facilitated the development of a local industry. It acquired a significant level of education and know-how, which allowed for fairly easy adaptation of some new technologies by the local industry. This economic growth has been accompanied by a reduction in poverty and an improvement in living conditions(1).
Nowadays, the dynamic created by the middle class is stalling. There is unemployment among young graduates from this class and a decline in their purchasing power, following the emergence of new expenses (health, education), despite the increase in their total spending between 1985 and 2010. This new malaise is even considered by political scientists as one of the causes of the rapid fall of the old regime in Tunisia!
There is increasing concern about a backlash and a possible loss of the gains of this class, which would lead to a slide into poverty.
However, in order to help this class, it is necessary to identify it properly. Adequate targeting also requires taking into account the various aspects characterizing the dynamics of the middle class.
Several definitions are put forward. However, they refer to different conceptions of the needs, aspirations, and roles of the middle class. We therefore extend our analysis to address sources of income, as well as the acquisition of durable goods by middle-class families. Finally, we highlight some obstacles to the dynamics of the middle class, and then propose policies to revive this dynamic.
Lack of consensus on the definition of the middle class
In order to facilitate the identification of middle-class households, most international organizations rely on the monetary income levels of households. However, since these definitions refer to different underpinnings of the needs of the middle classes, very different income ranges are obtained. Thus, we go from an income per person per day between US$2 and US$13 for the World Bank (WB), between US$2 and US$20 for the African Development Bank (AfDB), and between US$10 and US$50 for Western countries.
Other studies consider a definition based on the relative income of the middle class. Thus, the United Nations Development Programme (UNDP) classifies as middle class any household whose per capita income is between 50% and 150% of the national median income.
The use of a definition based on nominal or relative income level is not obvious for a study concerning Developing Countries (DCs). In these studies, we are forced to rely on the declarations made by the household on its income, while it is difficult to verify the veracity of these declarations. Households tend to underestimate their income for various reasons.
New procedures for identifying middle classes are no longer limited to household income levels, especially if the objective is to propose economic and social policies for the benefit of this class. An important criterion for understanding the nature of the middle class is to see how the head of household generates his income. “Nothing seems more middle class than the fact of having a steady well-paying job”, estimate Banerjee and Duflo in their study on the middle class.
This new definition, based on the opportunity to access a job, has even conditioned the form of economic policies towards the middle class. A recent report by the International Monetary Fund (IMF) on Arab countries puts forward the slogan: “subsidies for the poor and decent jobs for the middle class”. It draws attention to the fact that middle-class households in Arab countries do not need subsidies or social assistance, but “they want good quality jobs and business opportunities that empower them to flourish on their own”.
In a recent study, ESCWA (United Nations) also specifies that the problem of identifying the middle class is complex since the quantities and qualities of products consumed must be considered. In addition, a set of social attributes must be considered in addition to the levels of economic well-being of any household. Sociologists consider that members of middle-class households manage to meet their basic nutritional needs. Unlike the poor, they are not limited to quantities; they aspire to a better quality to satisfy psychological needs.
Evolution and characteristics of the middle class in Tunisia
* Evolution of the middle class between 1985 and 2010
We adopt a definition similar to that of the AfDB, but distinguishing only four classes: the poor (having less than US$2 per person per day), the lower middle class (between US$2 and US$4), the stable middle class (between US$4 and US$10), and the upper class of the rich(2). Graph 1 shows the distribution of the population between these four classes and reveals a significant decrease in poverty and the lower middle class between 1985 and 2010. Several poor households and those in the lower middle class have rejoined the stable middle class. In addition, several middle-class households have joined the upper class (Rich). The share of the stable middle class increased from nearly one-third of the population in 1985 to more than 50% in 2010.
Read the rest of the article on Kapitalis.com
