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Latin America

Chile's middle class survives on shaky ground

Chile's middle class is in better shape than it has been in decades. But in the Latin American country often praised for the economic strides it has made, the cost of prosperity is high, experts warn.

They live in quiet, safe neighborhoods. Their houses and apartments are solidly build and outfitted with electrical appliances. Their children go to private or good quality state schools. The families have access to cable TV and the Internet - and to bank loans that allow them such luxuries. That is the general situation of Chile's middle class. Studies by the University of Chile and Alberto Hurtado University indicate that 84 percent of Chileans consider themselves middle class.

But official statistics show a different picture. The state defines as middle class those who earn more than 140 to 380 euros ($186-$505) per month. 380 Euros is the minimum wage for an uneducated worker. That way the needy aren't considered middle class, just as a large family supported by one breadwinner isn't; such families often survive with the help of social welfare.

Among Latin American countries, Chile is a role model for economic development. The OECD's economic outlook forecasts the country's economy will grow by 5.1 percent in 2012, up from 4.4 percent last year. The South American country has the highest growth of all 34 OECD member countries.

But this is a point of contention for many Chileans: They say the state has forgotten the middle class, and that the struggle to overcome poverty comes at a cost to those people who don't live in bitter poverty but nevertheless have little money.

People on the beach at Vina del Mar, Chile (Photo: Martin Bernetti)

The middle class can afford some luxuries but lacks stability

"The destabilization and deterioration of working conditions is the central attribute of the Chilean middle class," says sociologist Alberto Mayol of the University of Chile. "Today a member of this class earns more than before, but he has less social and economic security. Insecurity defines his existence."

The Chilean middle class developed in the late 19th century when the trade with saltpeter in the country's north was booming. It changed Chile's economic structure and allowed the development of new social classes made up of academics, tradesmen and small property owners. In the course of the 20th century, administrative officials joined the new middle class.

"When the development model of the 1960s came to a standstill, Chile's middle class largely lost its political and social significance to the working class," sociologist Emmanuelle Bazoret of the University of Chile told DW. "Subsequently the dictatorship of Augusto Pinochet introduced a political, economic and social system that was focused on the market. The middle class was forced to find its way under very difficult circumstances."

In a recent study, Bazoret found that 43 percent of Chileans can be deemed middle class, 47 percent are working class, and the wealthy make up the remaining 10 percent.

People walk past a bank in Chile (Photo: Martin Bernetti)

Chile's middle class generally lives off credit

"Mid-level income is very low in Chile," Bazoret said. "As a result the distance between the lower classes and the middle class is very small. Their precarious economic position makes them susceptible to social decline due to unemployment, illness or poverty in old age."

A way out

Mayol says a societal consensus in Chile prevents people from talking about money. "That way the poorest aren't humiliated - and social conflict isn't stoked." Those who describe themselves as middle class are better able to avoid class strife.

In countries with strong middle classes, those who belong to it are less likely to fall into poverty, says Mayol. However, in countries where the rich are very rich and the poor very poor, and the middle class represents a mathematical mean of the two extremes, social differences lead to greater inequities. "That leads to huge societal problems: insecurity, suicide, a fall in values," he said.

Education is a way out for the Chilean middle class. It provides social stability and the chance to grow. During the 20th century, the middle class distanced itself from the working class through education. However, now they are the ones who view the country's educational model as being unfair, says Bazoret.

People march to demand free and quality education, in Santiago (Photo: Mario Ruiz)

Mass protests have called for free, quality education

"It is those who aspire to more - who believe they have earned it - who see that in the end their efforts don't pay off." The dissatisfaction this causes could be seen in recent years in the student and teacher protests against Chile's expensive and profit-oriented education system.

Chile vs. Germany

A study by the University of Bremen and the German Institute for Economic Research shows that the German middle class has shrunk, while there is an increasing gap to the socially weaker classes. Comparing the German situation to the one in Chile, Bazoret says that in the case of Chile, "the separation occurred in the 1980s and became fixed in the ensuing decades. But the German middle class is far more affluent than the Chilean middle class, whose middle and lower levels only have access to a limited social network."

Furthermore, she says: "Whether one belongs to Chile's upper class depends not only on professional qualifications, but also on marital relations, inheritance and social networks." It's not enough to have a good university degree.

At the same time, the social network is much tighter in Germany, Bazoret adds. "In Chile there is no social solidarity. Everyone pay for his or her studies, health and old-age pension. Those who can't pay, receive poorer quality products. In such a case, can you even speak of social solidarity?"

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