The middle class in the making

Wafiur Rahman
Thursday, January 11th, 2018


 

Bangladesh is embracing a new ‘driver in-between’, the army of consumers that leads the economic forces

 

Bangladesh has been in the recent decades undergoing a transformation of arguably the most dominant segment of its population – the middle class. One of the most discussed topics in families and societies around the world, the Bangladeshi middle class, faced with ups and downs as ever, still remains the driving force of many socio-cultural, political and economic activities, controversies and a silent revolution, no matter whether or not their existence is well-defined and role properly recognised.

 

My childhood friend Shahnawaz works at a private commercial bank. He earns a little less than six digits, rents a three-bedroom apartment in Dhaka city’s Mohammadpur area, loves to shop in the super malls and spends the weekend with his family eating out at city restaurants. He is planning to send his three-year-old baby girl to a reputed English-medium school the next year. Shahnawaz has already received a loan to buy a car.

 

With almost zero savings in his personal bank account, this banker happily thinks him to be a gentleman belonging to the middle class, something Irish dramatist George Bernard Shaw described almost a century ago. “A moderately honest man with a moderately faithful wife, moderate drinkers both, in a moderately healthy house: who never live for himself but for others.”

 

Middle class definition

 

Despite being placed in the middle (of two other classes) this social class is increasingly being, if not already has been, the most dominant factor for the economy and of course politics. Developed countries have experienced this dominance during different phases of their evolution and modern development and now it is the turn of Bangladesh which is absorbing and witnessing the growth of the middle class, but quietly – not in a visible manner in the realm of policies of obsession with poverty issues.

 

So the definition of this class is neither universal nor well-accepted by all, as it varies with country to country, region to region, from time to time and sometimes even with the purpose of discussion. Take the case of Mohsin. Available near Shankar bus stand every evening, he offers Jhal-muri to the passersby. During a conversation the ever-smiling boy informed this author that he had sales of around Tk 5,000 during the Victory Day celebration (on 16 December last year).

 

Each morning he spends Tk 500-600 to buy the materials to prepare Jhal-muri. At the end of the day, he returns home with Tk 1500, even a higher amount sometimes. He earns more than what one of my relatives who has just joined the civil service does and who curses the very ‘own self’ too often for being one of the middle class gentlemen, which by definition he is. It is certainly not suitable for Mohsin who earns and spends more, but describes him to be a poor man.

 

The Rise

 

Whatever is the definition, the number of the middle class people is on rise all over the world. Almost in keeping pace with the growth of population of most countries, consumption increases, thanks to the peoples’ desperate bid for attaining economic development based on benefits scientific and technological revolution.

 

But a recent study by Bangladesh Institute of Development Studies (BIDS) suggests that the number of Bangladeshi middle class has already reached the level of 50 million in 2015. Dr Binayak Sen, a BIDS research director and one of its authors, noted that the share of the middle class (who earn from $2-$13 a day) in total population rose from 7% to 35% in only two decades.

 

This figure can be substantiated by another study conducted by Bangladesh Economic Association. It says, the size of the middle class in Bangladesh is around 47 million, which is around 31.3 per cent of the total population. The BEA conducted the study on the basis of homestead ownership to determine the number of people belonging to different socio-economic classes. In rural areas, people with 101-750 decimals of land and in urban areas people with assets worth Tk 5 lakh-Tk 49 lakh are considered to be in the category of the middle class.

 

But what has contributed to the rise of this middle class? Development thinkers have attributed this growth of the middle class to a number of factors such as expanding service sector with white collar job opportunities, huge inflow of remittances, the robust export-based manufacturing industries rapidly creating jobs, targeted policy to provide credit to enterprises and of course microcredit that created millions of micro entrepreneurs and brought people out of the vicious cycle of poverty. It can be inferred from study findings and other literatures that the emergence of the middle class is being driven by the impacts of manufacturing and service sectors in cities and by remittances and microcredit in rural Bangladesh.

 

There are more data to explain the national consumption pattern in the latest HIES report by Bangladesh Bureau of Statistics. It says the average monthly consumption expenditure per household almost doubled (rose 84.5%) in last 5 years and tripled (increased 142.5%) in a decade. In 2005 a family could spend Tk 5964 in a month while the amount is Tk 11,000 in 2010. The expenditures in urban areas increased at a much higher pace than that in rural areas.

 

And this consumption is something that results in success for the companies such as Pran, Square, Meghna and City which have become giants within a short span of time. To meet the increasing demand, Bangladesh now produces products for its own market whereas the country was used to manufacturing mainly for exports. Examples are many and let it be increasing – showrooms of locally-made shoes in the shopping malls or local apparel brands and sales figure of garment stock lots. Industries are growing and they are growing very fast.

 

The growth, from the middle class growth

 

If the rise of the middle class is the result of steady growth, a faster growth is the result of increasing the size and purchasing capacity of people who are described as the middle class.

 

Dhaka city is a perfect example. Mirpur, once better known as residential destination of the middle and lower middle class people, now has showrooms of every major local fashion brands. Alongside major roads there are restaurants with colourful lighting, high-rise apartments, party centres, ice cream parlours, supermalls and what not.

 

The sales and public demand are shaping up the future, a future of robust market dominated by goods and services for the middle class. Our agriculture is turning into consumer product industry from its image of a sector producing primary commodity. Cane-based sugar factories are outperformed by sugar processors targeting the export market after meeting the local demand. Steel is undergoing an evolution – from ship-breaking to billet-based industry. Cement companies have taken the lead in market share leaving behind multinational entities.

 

The next boom is expected in electronics and automobile assembly. The curious case of Walton can truly explain the growth effects of the middle class in Bangladesh. Replacing giants like Sony, Phillips and even low-cost Chinese products, Walton has emerged as the largest player in the local electronics market. It sells around 200,000 television sets and two-thirds of the refrigerators every year marketed in the country. Walton is selling around 45,000 pieces of motor cycles a year and planning to set up an automobile manufacturing plant shortly. This is a story of hardly 10 years.

 

The policy checklist

 

So far the major policy objective for Bangladesh is to become a middle income nation as early as possible. To attain this target, the government is supposed to make investments in infrastructure, provide low cost fuel and electricity with subsidy and cash incentives for selected industries. These all should be aimed at making the path of growth smooth, increasing industrial productivity that can help attain the broader target of creating jobs and reducing poverty.

 

There are also job creating programmes for the ultra-poor that are commonly known as social safety net programmes. But the problem with them as identified by Dr Fahmida Khatun, Executive Director of Centre for Policy Dialogue (CPD), is that ‘in a country like ours the lower middle class people are not far from the poverty line, but they remain left out from social safety and public food distribution system. This is such an area where we should look at, as the benefit of growth goes to the rich and subsidy to the poor mostly.’

 

Inequality hurts the middle class not only in terms of income but also in accessing other social services. Let’s take the issue of education. One of the early criteria of defining this class in the society was education. But unfortunately, says economist Dr Hossain Zillur Rahman, quality divide in education has become the new driver of inequality. ‘Quality education has become the preserve of the upper class only.’ The same is true for quality healthcare and habitation.

 

Dr Fahmida suggests space for the middle class in the policy. According to this economist, the government can invest in low cost housing for the middle class or enable the private sector to do so by helping them with incentives, as house rent is the largest part of their routine expense. She suggests similar steps in the transport sector. She says, ‘This kind of welfare measures can increase productivity, reduce the propensity of corruption and also help the government to achieve proper development objectives.’

 

To the scholars, the help for the middle class is something that can accelerate the process of achieving the middle income status for the country in course of time. The anticipated middle income country status is a term relative to conditions prevailing now but we pursue it as a future goal while the middle class is a present status, if not clearly defined, but many of us want promotion without changing much our policies as reflected in absence of avowed official policies for supporting the middle class growth as a dynamic process.

 

Politics next

 

In a democracy its middle class people, who are mostly educated and can determine good or bad quickly, build the conscience of the society and it’s they who finally set the trends of politics. The recent demonstration in India against corruption, a challenge against BJP, is a sign of changes in Indian politics. This change is, no doubt. driven by the rising middle class that is building a conscious (and to some extent conscientious) society. Such happenings of raising the people’s voice have been seen in many democratic countries including the USA and the members of the European Union.

 

Bangladesh is definitely not an isolated island in that respect. Despite being plagued with inequality, corruption and infrastructure bottlenecks, the country is having a boom in the middle class population. As the level of internet penetration and access to information is increasing, the middle class consciousness is also widening day by day and they are getting more visible and proactive. The new middle class is probably awaiting a social awakening. Sooner or later, this middle class, apart from their role in consumption and growth and occasional opportunist stance of some of them, will surely lead the process of a change in Bangladesh, a change in electoral and everyday course of politics that determine the changes of many changes and changes in many other components of the society.

 

‘The most perfect political community is one in which the middle class is in control, and outnumbers both of the other classes.’ said famous Aristotle long ago. The task of outnumbering others has already been accomplished, now it’s the control factor left for the middle class in Bangladesh for building a prosperous, democratic society.

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