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Eye on the middle class

Egypt’s new government, while pressing ahead with reform, must give attention to the middle class, which has already started to crumble

Galal Nassar , Wednesday 20 Jun 2018
Views: 7141
Views: 7141

The biggest concern for any society undergoing difficult economic reform is the condition of the middle class and how it is impacted. The primary measure of any economic reform plan is the middle class; if reforms preserve this class then they are on the correct path, but if the middle class begins to erode, then it is a serious problem.

According to experts, even if the role and rhetoric of the government is to protect limited income families, the middle class remains the main indicator of success.

In Egypt, many believe the rate of implementing the reform programme is pushing the middle class through a social grinder, while others believe this is only temporary because this class will be the first to benefit from reform.

In the absence of accurate data and statistics about the size of the middle class in Egypt, it is important to define exactly whom this class consists of.

Clearly defining this class and dividing the various social categories in Egypt is necessary. “Using the economists’ language of numbers, the middle class are those whose income is more than LE5,000 a month,” explained Hani Tawfik, an economic expert. “Based on available data, this means the middle class has shrunk to less than 35 per cent of the population. This is a serious threat to social cohesion, political and security resilience.”

A report by the Arab Centre for Research and Studies reveals that Egyptian society is composed of six classes: the central ruling class; the local ruling middle class; the stable middle class; the poor middle class; the working class; and the underclass.

Members of all classes share many economic, cultural and bureaucratic characteristics: source and type of income; level of income; degree of education and training; position within the official division of labour; lifestyles and consumer patterns; and socio-political variables.

Galal Amin, thinker and economics professor, states in most of his books and articles that the middle class before the Nasserist era was educated, a characteristic that has remained until today in our definition of the middle class in Egypt. “It was very rare that you find someone who is uneducated in the middle class. It was also very rare to find an educated person (even if only at high school level) suffering life hardships. Yes, there could be a successful and illiterate merchant, or lucrative workshop owner who is also illiterate.

It was also possible for someone who is illiterate to own five or more feddans, however, it was very rare. Thus, in the minds of people belonging to the middle class is associated with education, and education was viewed as a guaranteed path for rising into the middle class.”

Amin notes that as education accompanied with greater emigration to Gulf countries grew, the middle class in Egypt after years of open door policies became “much larger than at any previous time, both in size and as a percentage of the population”.

What is worrisome now is the absence of objective gauging of the condition of this class, although some within the middle class are very aware because they are experiencing severe hardship as it erodes.

A large portion of this class is dropping below the poverty line because the income of most of this class is almost fixed in Egyptian pounds, and limited annual increases in the form of bonuses cannot keep up with consecutive waves of inflation. Experts believe the wealthier class can limit their losses through dollar savings and real estate.

Expanding social security nets such as pensions and subsidised goods will reduce the damage to the poor class, which is a good thing; but the middle class, which has fixed income, will suffer more and drop further.

The new cabinet in Egypt appears set to continue on the path of slashing subsidies gradually along with government decisions to expand protection programmes, especially Solidarity and Dignity which will cover millions of families in villages and impoverished areas. There is also a turn to replace material assistance with financial aid.

The cabinet of Mustafa Madbouli must quickly look into new social programmes to extend the social protection umbrella, before it takes any decisions to cut subsidies, in order to preserve what is known as the middle class which has already started to crumble.

This will also protect society and the pace moving forward because in any society the middle class leads action and progress, and is the key to success. The middle class guards the nation’s identity, culture and character; if it collapses it will mean demise, failure and chaos.

*A version of this article appears in print in the 21 June 2018 edition of Al-Ahram Weekly with headline: In focus: Eye on the middle class

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