Latin America: spectacular growth new middle class up to 50 Million10.12.2012
The middle class of Latin America experienced a spectacular growth of 50% in the last decade and now represents 30% of the population. According to the World Bank’s study "Economic mobility and the growth of the middle class in Latin America", which was released on November 13th 2012, the rise of the middle class was exploded by the dashing economic growth per capita regional between 2000 and 2010, which almost doubled that of the previous decade and pushed the level of income.
The study describes the growth of the new middle class that has worked its way up the social and income ladder in Latin America in the past decade. This group, with a monthly income between USD 300 - 1,500, went from 103 million people (2003) to 152 million people (2009). Today almost one third of Latin American families are now considered to be middle class. This development mirrors the region's share of the poor to almost the exact same proportion (or 30% of the population), experts mention in another study.
“It’s a historic increase, related to the drop in unemployment rates and informal employment. Therefore, the growth of the middle class in the past ten years is down to growth dynamics and job creation “, explains World Bank Regional Chief Economist Augusto de la Torre.
Better education and the essential role that women have played in the labor market over the past years are the main aspects of this structural economic development. In fact, in recent years more than 70 million more women set foot on the labor market, playing a crucial role in reducing poverty and expanding the economic middle on the strength of improved academic credentials and professional skills. Obviously, better accesses to quality education and reliable safety nets have played an important role in lifting Latin Americans out of poverty.
Some countries illustrate particularly large percentages, such as Colombia, where 54 % of the population experienced upward mobility, and Brazil’s middle class growth of over 40 percent is the region’s fastest. Also Mexico's middle class has grown since 2000 with 17 %. Social programs and better access to education boosted the country's workforce. In order to maintain this growth, the region needs to embrace policy changes including labor, taxation and social security, experts warn. “These changes include better targeting subsidies for the poor, improving tax collection to pay for public services, and emphasizing social insurance (such as unemployment benefits) rather than social protection”, Chief Economist de la Torre of the World Bank notes.
World Bank President Jim Yong Kim emphasizes another perspective: “Because of the Eurozone crisis, many countries are thinking very much in the short term. But Latin America, because of years of efforts, has the luxury to think more long term, and that’s important for the region “.
As middle classes begin to make up a larger share of societies, the trend has been to see a strengthening of democratic institutions, lower levels of corruption, and better quality of public services. Mister de la Torre can only be positive about Latin America’s latest development: “Latin America for years was one of the world’s most unequal regions, but now is one of the few, if not the only regions where inequality is falling – that’s a remarkable phenomenon”.