The definition of middle class combines income criteria – usually between 50% and 150% of the per capita average or more than four times the poverty line -determined by the threshold that establishes the value of the Total Basic Basket of a person or family-, but below the 90th or 95th percentile of the income distribution- and access to essential goods and services: own or adequate housing, complete or higher secondary education, formal health coverage and the ability to meet non-essential expenses, such as transportation or recreation, which together determine the “living conditions” of the population.
Over time, the needs and basket that distinguishes this group have changed. Indec’s methodological parameters that determine the income required to enter this stratum were also adjusted, seeking to more representatively reflect the economic and social reality of Argentina, although pending challenges remain.
The weight of the middle class is central to consumption, investment in education and social cohesion. Its weakening has repercussions on the productive fabric and aggravates distributive tensions.
Furthermore, a disillusioned middle class tends to lose confidence in institutions and economic management, which generates a vicious cycle of distrust and volatility.
Throughout history, the Argentine middle class has been a social and economic engine; However, over the last forty years it has suffered persistent deterioration.
What was a symbol of stability, educational access and social mobility is today conditioned by a constant feeling of fragility.
Since the 1980s, chronic inflation, exchange rate fluctuations and recurrent crises have undermined the purchasing power and savings possibilities of households in this segment.
A disillusioned middle class tends to lose confidence in institutions and economic management, which generates a vicious circle of distrust and volatility.
The proportion of the middle class in the country varies according to each stage and the policies adopted. According to the year taken as a reference, the presence of this group fluctuates depending on national economic cycles.
Factors such as employment, inflation, purchasing power and public policy impact its size. At the same time, the international context – global crises, variations in raw materials or modifications in trade flows – also affects the chance of households to maintain or improve their position within the social structure.
Among the factors that pushed back is the combination of structural and temporary houses.
The Argentine economy failed to consolidate a stable growth pattern: each expansion ended up followed by debt crises or inflationary escalations, with an impact on real income and formal employment.
On the other hand, the loss of value of the peso and the dollarization of prices of durable goods – such as homes or vehicles – marginalized a large portion of the middle class from the asset market, preventing wealth accumulation.
The loss of value of the peso and the dollarization of prices of durable goods – such as homes or vehicles – marginalized a large portion of the middle class from the asset market.
Restoring macroeconomic stability is a necessary condition to break this cycle: without low and predictable inflation, a genuine reconstruction of the middle class is unfeasible.
However, we also need an agenda that prioritizes:
- competitiveness,
- productivity,
- registered employment, and
- quality education.
The challenge is not only economic, but also cultural: the expectation of progress that faded decades ago must be recovered.
The author is an Economic Analyst and director of Focus Market
