Middle-Class Barely Weathering the Storm


By Marcela Valente

Inter Press Service
October 1, 2002

Millions of Argentines who a year ago formed part of the country's strong middle-class have been driven into poverty by the economic collapse, which experts say could give rise to an irreversible gap between rich and poor. A new study argues that although 53 percent of Argentines officially live below the poverty line and 24.8 percent are ''indigent'' (extremely poor), 80 percent of the population is actually impoverished, if middle class families who are down on their luck are included.

According to the National Institute of Statistics and Census (INDEC), a family of four is considered poor with an income below 630 pesos a month, and indigent with an income below 385 pesos. But a local consultancy, CCR, uses a different measurement, which takes into account the higher cost of living for the middle class.

CCR points out that people living in the slums - known here as ''villas miseria'' - do not pay for their electricity, which they obtain through illegal hook-ups, do not pay taxes, and do not face mortgage payments. Nor do they have telephones or cars, on which bills also fall due. The consultancy asserts that a middle class family of four needs at least 1,420 pesos a month to cover not only the cost of the basic consumer basket but also the monthly bills that come in.

CCR says that in December 2001, 30 percent of Argentina's 36 million people were ''non-poor'', because they earned more than 1,040 Argentine pesos (equivalent to 1,040 dollars at that time) a month. Due to the inflation that was unleashed in January - which comes to nearly 40 percent so far this year - the minimum monthly income rose to 1,420 pesos, which because of the crash of the local currency is now equivalent to 380 dollars, the study's author, Guillermo Oliveto, told IPS.

After four years of recession peaked in December in the full- blown crisis that led to the fall of the government of Fernando de la Rúa and the end of the currency board scheme that pegged the peso to the dollar, the proportion of ''non-poor'' fell to 20 percent of the population, says the CCR report. Meanwhile, unemployment has continued to climb - to nearly a quarter of the economically active population - and many of those fortunate enough to have a job have seen their wages cut.

Today it is conceivable that a teacher and a university professor can together earn less than 1,420 pesos a month. And if they have children, the family's income per person is reduced even further. A family like this would join the ranks of the ''new poor,'' even though they are homeowners with a high level of education and ''good'' jobs. ''At this time there is a deep debate among academics from the field of social sciences and pollsters and others who work in the market, because we see how difficult it is to define who does and who does not belong to the middle class,'' said Oliveto. Some who previously belonged to the more affluent sectors of society have even fallen into extreme poverty, he added.

A Buenos Aires secretariat of employment official Horacio Pérez said Sunday that among the unemployed heads of households who are now receiving a government subsidy of 150 pesos a month, ''we see a significant proportion of beneficiaries with a high educational and labour skills level.'' He added that unemployed professionals like graphic designers, teachers and tour operators who are receiving the stipend have been called on to provide skills training in government programmes.

In Oliveto's view, if the government that is to take office next May fails to curb the country's economic decline, ''in time, our social structure will begin to look like that of other Latin American countries, where there are heavily marked extremes.'' But if the depression is reverted, Argentina's middle class may not disappear, he added.

Nearly 80 percent of opinion poll respondents say they have changed their consumption habits to weather the storm. The stores ''Everything for Two Pesos'', which mushroomed in the 1990s when one peso=one dollar, are losing ground now to shops that offer ''Everything in Bulk,'' from cleaning products to food. Disposable diapers, the prices of which have risen more than 100 percent, have become a luxury item, and cloth diapers are once again easy to find on the shelves. The number of mobile telephones, a symbol of modernity and of the economic well-being of the 1990s, is shrinking fast. This year customers have returned nearly 330,000 cell phones.

Even milk has begun to be sold directly in small towns and villages by dairy farmers who thus elude the intermediaries - as well as the process of pasteurisation, which kills potentially harmful bacteria. The problem is that the cost of pasteurised milk has risen 65 percent so far this year, and even the Health Ministry was forced to admit that ''dying of hunger is a worse risk.''

According to INDEC, of the total proportion of people who were living above the poverty line in October 2001, 22 percent had fallen into poverty, and 5.3 percent into abject poverty, seven months later. That is what happened to many middle class people who lost their jobs and found no safety net to curb their fall.

Some have even taken to the streets to gather garbage - paper and cardboard - to sell for recycling. Among the growing ranks of rubbish sorters can be found electricians, carpenters, construction workers or former office workers.

The Jewish community, Latin America's largest, which comprised part of the better-off segments of society in Argentina, is suffering a decline that has overwhelmed many of the community's mutual aid institutions, and has driven a large number to emigrate to Israel, despite the bloody conflict with the Palestinians.

Those who have been forced to turn to the mutual aid institutions preserve traces of their privileged lives, like brand- name clothing, but have often lost their jobs and even their homes, and - if they are lucky - are now renting. ''How are we going to eat in the same room where we sleep?'', ''How could I possibly work as a chauffeur?'' they ask the volunteer aid workers who interview them.

Depression and other mental problems are on the rise among the middle class, frustrated by the loss of buying power and of their prospects of moving up the social ladder, said psychiatrist Marcos Berstein, a family therapist and adviser to the Pan-American Health Organisation. ''People feel that if they have nothing, they are nothing,'' because class identity is based on the power to purchase certain goods and enjoy access to certain services, he explained.

''There is a great intolerance of 'not having', but there are also sectors that realise that the problem is not an individual one, and who are able to knit together a network based on common interests,'' he said. The pot-banging street protests that played a decisive role in toppling de la Rúa were staged by the middle class, especially those whose savings are trapped in the banks by the freeze on deposits put into place in December to stem the run on banks.

Another emerging phenomenon is the bartering networks, in which nearly one-third of the population now participates to swap goods and services. ''Life-long employment no longer exists, but there is work, and it is called self-employment,'' said Marita Salvat, the director of the Salvat Foundation, which helps the ''new poor'' through seminars and workshops on questions like self-esteem, to help them discover that ''instead of looking for work, you can offer a service.''

In 1970, when the distribution of wealth in Argentina was at its most equal, 70 percent of those interviewed in surveys described themselves as belonging to the middle class, which was divided into upper-middle, middle-middle and lower-middle, says a report published in the mid-1990s by sociologist Alberto Minují­n. By 2001, just 33 percent of those surveyed by the CCR were considered part of the middle class.

Many people from the narrowing segment of privileged Argentines are so afraid of losing everything that they emigrate before that happens. Fifty-six percent of those interviewed by the governmental New Majority Centre said ''they would like to leave if they could.''

Claudia Barrau, a university professor, and her husband Pablo, a professional, told IPS sadly that they were not going to wait until they lost everything. ''I can't stand the thought that we might not be able to afford medicine. I prefer to leave before it's too late,'' said Claudia. They are heading to Barcelona, Spain, leaving behind their lovely house with a spacious yard and a swimming pool, and pulling their two teenage kids out of the private school they attend. ''Luckily I have a European passport,'' added Pablo, who said his grandparents had fled Germany and found a promised land in Argentina, where they prospered, like so many European immigrants in the past.

More Information on Inequality of Wealth and Income Distribution
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