Although 56 million households have joined Latin America's middle
class, many lack the benefits and job security to ensure stability.
With a regular salary as a beauty salon manager, Edgar Ladino
supports his two children, leases a compact car, and is able to make
rent payments on time.
"It's not my dream job, but it's OK," he says with a shrug,
sipping a latte at a Bogota shopping mall.
Mr. Ladino may not love his job, but it has landed him a spot in
the burgeoning Latin American middle class. Millions across the
region are finally setting up new companies, buying cars and homes,
and helping to further stabilize democracies. In the world's most
unequal region, their rise has dominated policy documents, academic
papers, and press reports.
Fifty-six million households have joined the Latin American
middle class in the past decade and a half, according to new
analysis by the United Nations Economic Commission for Latin America
and the Caribbean (ECLAC), which studied 10 countries in the region
representing 80 percent of the population. The growth mirrors trends
in the rest of the world, the group says, with 1.3 billion people
today calling themselves middle class.
But behind good news lies a troubling reality. While new members
of Latin America's middle class might be better off than their
parents, the benefits often taken for granted by their Western
counterparts remain far from their grasp. Many are barely holding on
to their new status, with insecure jobs and poor access to quality
education for their children. In most cases, they are more likely to
fall into poverty again than rise into affluence.
Ladino's situation, for example, is far from stable. Like
millions of Colombians, he only has a one-year contract. It expires
at the end of May. It's entirely up to his employer whether to renew
the contract or not. "What kills me is the uncertainty," he says. If
his boss decides to not sign him on again, Ladino isn't sure where
the next car payment will come from.
"This is not a European or US middle class," says Christopher
Sabatini, editor-in-chief of the policy journal Americas Quarterly
in New York, which is published by the Council of the Americas. "I
think we are at risk of over-blowing the stability and type of
middle class that has grown. ... It is very, very fragile."
Several factors are driving up economic status, including greater
access to education and credit and macroeconomic policies that have
kept inflation in check.
Across the region, GDP grew by an average of 2.6 percent between
2000 and 2008, according to the World Bank. Many countries have
reduced poverty by paying families who keep their children in
school. Demographics have also been a boon, as the population of
those of working age is greater than those not - giving families
Growing informal economy
But no longer categorized as poor, many in the region find they
are surviving on the fringes, without a base in place to secure
them. One reason is the growing informal economy.
According to the OECD's Latin America Economic Outlook 2011,
which looked at the heterogeneity of the middle class, more than
half of 72 million "middle sector" workers in Bolivia, Brazil,
Chile, and Mexico - those with household income per capital between
50 percent and 150 percent of the national median - work informally,
which means they have no safety net in the case of illnesses,
retirement, or job loss. …