‘ESCWAnomics’ concludes middle class Arabs constituted 36.7 percent of population in 2011

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ESCWA's headquarters in Beirut, Lebanon. Al-Akhbar/Marwan Tahtah

By: Firas Abou-Mosleh

Published Tuesday, December 16, 2014

The middle class is the largest segment in Arab social hierarchy, according to a “first attempt” by the UN Economic and Social Commission for Western Asia (ESCWA) to define and measure the evolution of the middle class in the Arab world. ESCWA says the middle class does not need government social assistance but a new Arab development paradigm based on regional integration and public investment, according to a report it published on Monday.

Since the start of the so-called Arab Spring, there have been contradictory characterizations of the underlying economic causes. Some said it was a revolution of the middle class. Others said the chaotic nature of the uprisings was the result of the decline of the middle class, resulting from ‘reforms’ undertaken in the past two decades (read the neoliberal policies imposed by the Washington Consensus – the International Monetary Fund and the World Bank). So which characterization is correct? This was the question asked by the Deputy Executive Secretary of ESCWA Abdullah Dardari at Monday’s launch event for ESCWA’s Arab Middle Class Report.

Dardari said there were global definitions for the middle class, but pointed out that there should be an Arab definition, to measure it and study it more accurately in the Arab social, economic, and political context. Dardari confirmed that the middle class had eroded in the past two decades.

The middle class is a compound concept that would take hours to discuss, according to the lead author of the report Khalid Abu Ismail, chief of the Economic Policy Section at ESCWA. Abu Ismail said that the middle class, whichever way we define it, remains the main driving force behind successful development experiments.

However, Abu-Ismail does not agree that the Arab middle class had declined or eroded based on his two definitions. The first definition is an economic one, which defines the middle class as those individuals who are between the poor/vulnerable segment and the well-off segment. Abu Ismail said that if a household spends money on luxuries, then this would put it in the well-off category.

The other definition is social or professional, according to Abu Ismail, who defined the middle class as those white-collar workers employed in the formal economy, and who hold a high-school diploma at the very least.

In light of these very loose limits for the definition of the middle class, it is no surprise that the report concludes that the middle class was the largest economic group in the Arab countries in 2011.

According to the report, the size of the middle class has remained stable, and only shrank slightly from 47.3 percent in 2000 to 45.1 percent in 2011. However, factoring in the repercussions of the crisis in Syria and the crisis in Yemen meant that the figures showed a sharp decline in the size of the middle class, to 36.7 percent in 2011, in tandem with an increase in the size of the poor/vulnerable segment from 39.5 percent in 2000 to 52.9 percent of the population in 2011.

The report also shows a decline in the size of the more well off segments, from 13.3 percent in 2000 to 10.3 percent. The figure, according to the report, would have been 11.3 percent in 2011 had it not been for the crises in Syria and Yemen. Broken down by country, the size of the middle class was, according to the report, as follows: 60.9 percent of the population in Iraq; 56.5 percent in Syria; 55 percent in Jordan; 57.5 percent in Tunisia; 44 percent in Egypt; and 56.2 percent in Lebanon.

The report subtly tries to exonerate the policies of the Washington Consensus, which have dominated much of the Arab countries in the past two decades, from having any responsibility for what Zafiris Tzannatos, World Bank and International Labour Organization advisor, described as the decline of the middle class in the whole world as a result of the concentration of wealth in an unprecedented way since World War I.

Nonetheless, Abu Ismail’s presentation actually corroborates Tzannatos’ view. Abu-Ismail said that the reason for the poor performance of Arab economies were the macroeconomic policies that could not benefit from the potentials of young middle class people. Abu-Ismail explained that the informal labor market, where wages are low and social security benefits are non-existent, remains the main employer of young people in the Arab countries.

According to the report, the public sector used to absorb 70 percent of the Egyptian workforce in 1980, compared to 15.5 percent in the informal private sector and 7.5 percent in the formal private sector. In 2000, the public sector employed only 23 percent, compared to 41.8 percent in the informal private sector and 9.6 percent in the formal private sector.

The report claims that there is relative stability in the size of the middle class between 2000-2011, where the informal private sector in Egypt in 2012, for example, absorbed 51.2 percent of the workforce, compared to 21.3 percent in the public sector and 14.3 percent in the formal private sector. But some believe this “stability” is actually neoliberal destruction plateauing, as it has led to rising social pressure and arguably the subsequent Arab uprisings.

In addition, Abu Ismail himself, in response to a question from Al-Akhbar, said that the social and economic configuration in Egypt had completely changed between 2000 and 2011, where the middle class “shrank” despite the fact that the “exclusionary growth” ratio in the same period was between 5 and 6 percent. Abu Ismail said that Egypt’s case was a sample case, and that if we had enough data on all Arab countries, we would have found similar cases.

Indeed, Egypt is not an exception. Public sector jobs have become rare at the level of the entire Arab world according to the report. The middle class has shifted from working in agriculture to the services sector, and at a lesser degree to manufacturing. The report said that “other services” in addition to transport and trade now dominate the sector, accounting for 79 percent of economic activity in 2011, 61 percent in Iraq in 2007, 75.1 percent in Syria in 2007, 73.2 percent in Jordan in 2010, and 68.1 percent in Lebanon in 2005.

The report also indicates that professionals are now a minority not exceeding 10 percent of the middle class as it defines it, and that the proportion of the poor/vulnerable in the workforce has risen in most countries of the Arab Spring. In this context, the report stated that economic policies were responsible for the misalignment between education and the labor market, rather than the shortage in skilled workers.

This article is an edited translation from the Arabic Edition.

Comments

Pardon me if I laugh instead of reading this. I was in charge of the NATO opinion polling in Afghanistan 1999-2013, which concluded that a NATO invasion would not only be very popular (76.2%) but that it would undoubtedly succeed beyond anyone's wildest expectations (94.3%). Albeit we had a very small sample size: President-to-be Karzai and his half-brother, who were the only two guys we found in the NYC cafe when we did our polling.
Well, I read it. Is it legal in Lebanon to sue the university from which you graduated, even if located outside Lebanon, for destroying your mind?
How does China stand up, or can the authorities cited here not consider it because Arabs are exceptional? "Successful development experiment"?
I wonder if the numbers add up. Formal economy: less than half the economy. White collar jobs within it???
Generally speaking, if you can't define the term you're guiding your search with, you're not going to find anything. You'd be better off with Lenin's definition of Marxism according to Mao according to Han Suyin's biography: "concrete analysis of concrete conditions": just wander around and see what is there. The first thing you would notice there is that the entire formal sector of every Arab country except perhaps Iraq is entirely corrupted by Western neo-colonialism. Think of an Egyptian judge, for example. Or a Lebanese serviceman.

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