Half The World Now Middle Class

More than half the world’s population is now middle class, researchers have calculated. The tipping point was reached when the number of people who qualify as middle class nudged to just short of 3.6 billion, presenting vast new markets for businesses but creating rising expectations of public services. The proportion is higher than the 3.1 billion considered to be economically vulnerable and the 630 million who live in poverty. A further 200 million people were classed as rich. The analysis was done by World Data Lab, a social enterprise based in Austria that provides economic and demographic forecasts. It classified people as middle class if they had discretionary income to spend on large consumer items such as refrigerators, washing machines or motorcycles, if they paid to go to the cinema or for other forms of entertainment, and if they went on family holidays. Researchers assumed that this group had accrued enough resources to be reasonably confident that they could withstand an economic shock, such as illness or a period of unemployment, without slipping into financial insecurity.

Researchers used information about income and spending surveys from 188 countries to classify all households as rich, middle class, financially vulnerable or poor. They argued that too little attention has been given to the global phenomenon of the rise of the middle classes. While rising living standards mean that one person escapes extreme poverty every second, the analysts calculated that five people a second were entering the middle classes. By 2030, the researchers forecast that the number classed as rich will have grown to 300 million, but the middle classes will have expanded by 1.7 billion to 5.3 billion people. The number who are financially insecure or vulnerable will have shrunk to 2.3 billion and those living in extreme poverty to 450 million, they predict. They categorised the poor as those living on or below $1.90 (£1.50) a person a day; the financially vulnerable are those living on $1.90 to $11 a day, using figures on purchasing power from 2011. Middle-class spending could go up to $110 a day, above which level people were classified as rich.

Rising incomes in Asia account for the march of the middle classes, with nine in ten of the new middle-class consumers predicted to be in China, India and South and East Asia. Kristofer Hamel, the chief operating officer of World Data Lab, said, “We are living through a landmark moment in human history: the first time since agricultural civilisation began when the majority of the world’s population does not live in considerable poverty. While spending $11 a day or more may not seem like much to those who live in developed economies, crossing this threshold often constitutes the beginning of basic middle-class behaviour and lifestyle — having a basic standard of sanitation and health care, decent housing and the possibility of improved educational outcomes.”

Credit: Greg Hurst for The Times, 3 October 2018.