POPULATION: Brazil's Shrinking Middle Class

POPULATION:
Brazil's Shrinking Middle Class
Mario Osava

RIO DE JANEIRO, Sep 21 (IPS) - With the expansion of industrialisation in Brazil in the 20th century came an accompanying growth of the middle class in this South American giant. But in 1981 that trend began to reverse, in response to prolonged economic stagnation and frequent periods of recession over the last two decades.

The middle class - defined in Brazil as the segment of the population with a monthly per capita income of more than 1,000 reals, or 340 dollars - accounted for 42.5 percent of the country's total population in 1981.

By 2002, that figure had dropped to 36 percent, according to a study by Waldir Quadros, a professor at the State University of Campinas, 100 kilometres from Sao Paulo.

And according to Quadros, the reality is "even worse than the picture painted here," which is based solely on levels of income.

The cost of living has increased tremendously for the middle class in recent years, he told IPS, partly due to inflation, but primarily because of a change in consumer demands, which now encompass products and technologies that didn't exist before.

To maintain a middle class lifestyle in Brazil today means having a computer, Internet access, a cell phone, more sophisticated electronic equipment, like DVD players, "even imported wine," explained Quadros.

The study reveals that while the middle class shrank, the ranks of the poor in Brazil grew larger, from 30.5 percent of the population in 1981 to 35.9 percent in 2002. In absolute terms, the number of Brazilians living in poverty rose from 36.3 million to 61.7 million people out of a total population of more than 178 million.

For Quadros, the fundamental cause for this was "the lack of economic growth," which led to severe rates of unemployment in the 1990s. Other factors, like productive restructuring and the replacement of manual labour with new technology, had little or no effect on the situation, in his view.

The economic recovery experienced this year, projected to lead to GDP growth of more than four percent, is nothing more than a temporary improvement, because the obstacles to sustained economic expansion still persist, he said.

Spurts of economic growth will continue to be cut short by inflation and foreign exchange crises, he explained.

Brazil "has no way of financing its growth," the economist said. Even though the heavily indebted state is making an enormous effort to reduce the fiscal deficit, the resources needed to invest in economic development go instead towards paying the high interest on the country's public debt, and no solution is in sight.

For "cultural" reasons particular to Brazilian society, "there is little value placed on work," and this is reflected by low wages and the diminishing proportion of the national income represented by wages and salaries, according to Jan Wiegerinck, president of Gelre, the human resources firm that co-sponsored Quadros' study.

The economic recovery currently underway in Brazil - which the Central Bank is already trying to keep in check by raising basic interest rates - has had very little impact on the middle class so far. The Ministry of Labour hailed the creation of 1.2 million new jobs between January and July of this year, but all of them were low-paying, with monthly salaries of less than 780 reals (270 dollars).

To boost incomes, the country needs to raise productivity and solve certain "structural problems", such as the oversized bureaucracy, the poor quality of education, and the dismal distribution of income, Wiegerinck told IPS.

Judges and lawmakers in Brazil earn more than their counterparts in wealthy countries like the United States, which is why the greatest wage inequality "is found in Brasilia (the seat of the federal government), not in the private sector," he said.

As for the private sector, intermediate-level positions, like the middle class itself, are becoming "an endangered species". Mid-level managers are disappearing, while the salaries and benefits given to top executives continue to grow, IPS was told by Mauro, a private business consultant who preferred to remain anonymous.

Mauro, formerly a human resources manager for a number of transnational corporations, is a prime example of this process and the "impoverishment" of his social class. He lost his last steady job in 1998 and has been forced to work as a consultant, trying to survive on temporary contracts that grow scarcer every day.

Losing his job also meant losing the health insurance provided by his employer. "We can't afford to get sick anymore," he said, because private health care plans are extremely costly.

Yet people are getting sick more than ever, he added, even those who are still working, due to the physical effects of the stress caused by the higher cost of living and rising crime rates.

Mauro's wife, a teacher, had to take on work giving classes at a number of different schools in order to bolster the family income. She developed serious psychological problems, but ensuring the education of their three children, who were finishing secondary school and beginning university at the time, was an absolute priority.

Teachers' salaries "were very good" in the 1970s, when Mauro also worked as a secondary school teacher, but today they are abysmal, he said. In fact, teachers comprise one of the segments of the Brazilian middle class that have suffered the greatest drop in real income.

Once Mauro's children had finally graduated and begun to work themselves, the family's overall situation did not improve. Now married with children of their own, the salaries they earn are not sufficient to provide them with the lifestyles to which they had become accustomed in their childhood and adolescence, Mauro lamented.

The high unemployment rates in Brazil in recent years have particularly affected young people under 25, according to official statistics and numerous studies.

And a good university education is no longer any guarantee against this fate. In fact, according to Quadros' study, the largest increase in unemployment was precisely among university and high school graduates.

This fact further demonstrates that larger numbers of middle class youth are now being forced to look for work, and thus raising the open unemployment rate, which only takes into account those who are actively seeking employment.

In the past, many of them would not have worried about finding a job until they completed their university education, because their parents' incomes were sufficient to support the family, said Quadros.

The problem is not limited to Brazil. This diminishing of the middle class and subsequent increase in inequality have also been experienced in other South American countries with historically sizeable middle classes, like Argentina and Uruguay.

In Argentina, a country with 37 million inhabitants today, the middle class represented almost one half of the total population in the 1980s. But then, in the early 1990s, a process of gradual impoverishment began, an unprecedented phenomenon in a country traditionally characterised by upward social mobility.

The "nouveau poor" of Argentina are middle class families who continue to own property and assets and have been able to maintain certain levels of education but do not earn enough in terms of income to remain above the poverty line.

Between 1980 and 2002, the proportion of the "income poor" in Argentina rose from 3.1 to 35.8 percent of the country's population, according to 'The Middle Class: Seduced and Abandoned', a book published this year by Alberto Minujin, an expert in statistics, and journalist Eduardo Anguita.

In absolute terms, the number of formerly middle class Argentines who dropped below the poverty line grew from 219,000 in 1980 to 4.3 million in 2002. (END/2004)