You’d be surprised at how poor the new ‘middle class’ is in the developing world

Topics: ILO ♦ international labour organisation

The International Labour Organisation has identified a rapid growth of ‘the developing middle class’ – a group earning between $4 and $13 a day

When a million people swarmed on to the streets of Brazil last June there was consensus that the protest was a phenomenon of the “new middle class” – squeezed by corruption and failing infrastructure. As the Thai protests continue, these too are labelled middle class: office workers staging flashmobs in their neat, pressed shirts.

But what does middle class mean in the developing world? About 3 billion people earn less than two dollars a day, but figures for the rest are hazy. Now, fresh research by the International Labour Organisation (ILO) economists shows in detail what’s been happening to the workforce of the global south during 25 years of globalisation: it is becoming more stratified – with the rapid growth of what they term “the developing middle class” – a group on between $4 and $13 a day. This group has grown from 600 million to 1.4 billion; if you include around 300 million on above $13 a day, that’s now 41% of the workforce, and on target to be over 50% by 2017. But in world terms they’re not really middle class at all. That $13 a day upper limit corresponds roughly to the poverty line in the US in 2005. So what’s going on?

The ILO researchers mined data from 61 household surveys across the world to come up with these figures. In the process they adopted a rough definition of the lifestyle of the sub-$13 group. The key markers were: families had access to savings and insurance, were likely to have a TV in the home and to live in smaller households (four people). They would typically spend 2% of their income on entertainment – plus they would have better access to water, sanitation and electricity. These, then, are the “winners” from globalisation: an expanding group for whom global growth has meant a serious rise in real income, year after year, compared with the recent near stagnation of incomes for working and lower-middle-class families in parts of the developed world.

You might assume the “developing middle class” are mainly factory workers but they’re not. One of the most startling results of the ILO survey is that more than half the “developing middle class” works in the service sector. Factory workers form between 15% and 20% of each income group: they are spread from the destitute to the above-$13 group. This, say the researchers, reflects the fact that the industrial sector of the global south now offers as much skilled, high-value work as it does sweated labour.

When Harvard economist Richard Freeman calculated the “great doubling” of the world’s workforce – as a result of global development and the entry of former communist states into the market – the assumption was that this would recreate a “proletariat” at the periphery of capitalism. It did, but the ILO calculation is the strongest evidence to date that they are moving steadily towards stratification and more service-oriented work, just as its rich-world counterpart did in the 1960s and 70s. Go to the reality of being “new middle class” in Brazil, Morocco or Indonesia and the word “comfortable” does not spring to mind. It means often living in a chaotic mega-city, cheek-by-jowl with abject poverty and crime, crowding on to makeshift public transport systems and seeing your income leach away into the pockets of all kinds of corrupt officials, middlemen and grey market people. This in turn has shaped what people protest about. There remain, of course, high-profile workers’ struggles: in Argentina there are still more than 180 occupied factories. The cotton city of El-Mahalla el Kubra in Egypt remains the kind of place that can pull a total work stoppage and, as in December 2012, declare ”autonomy” from the government.

But the ILO trend suggests that, by the second quarter of the century, the typical social dynamics of a medium-developed country will be a mixture of “workplace” conflicts and the more networked, sporadic and volatile ones we saw in Turkey and Brazil last year. The western left has lived through decades of angst over the decline of the manual work, and its ideology of resistance, sometimes softened by the hope that it would all be recreated somewhere else. The ILO survey suggests not.

What was unthinkable 20 years ago is now becoming tangible: that the real incomes of skilled workers, knowledge workers and managers in “developing countries” are overlapping with those at the bottom of the heap in western society. But where once this prospect was understood to foretell stability, it does not. As the World Bank lead economist Branko Milanovic has shown, when it comes to causing inequality, the impact of class and location have reversed: “Around 1870, class explained more than two thirds of global inequality. And now? The proportions have exactly flipped: more than two thirds of total inequality is due to location.”

Milanovic calls this the “non-Marxian world”, in which class struggle becomes less useful as a strategy and the logical thing to do is migrate: “Either poor countries will become richer or poor people will migrate to rich countries”. I think, on the contrary, that the upsurge of unrest is a signal that the rising, poor, new middle class – which cannot migrate en masse – has decided to force poor countries to become richer in democracy, sustainability, urban infrastructure, healthcare.

They’re choosing signal issues – corruption, transport, green space as in the Gezi Park occupation in Istanbul – but across the world their determination to make life on $13 a day less arbitrary and insecure is clear.

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