July 21, 2002	Sunday	Jamadi-ul-Awwal 10,1423

THE BUSINESS team of Dawn investigates to identify people falling in the middle category in urban Pakistan. And to discover if there is meltdown of middle class to below the poverty line. The Dawn team also tries to reach out to other stakeholders in the economy to seek their views on the issue.

KARACHI, July 20: This is a study of the middle class. The one that should be the pillar of economy. A foundation, on which everything from savings to growth to investment depends. But with shrinking income and expanding needs and demands, it is this middle class that finds itself between a rock and a hard place.

Astonishing facts come to light as Dawn’s investigating teams peep into the life of an ordinary middle class citizen in all four provincial capitals of the country. For the sake of consistency, the sample is drawn from a middle class citizen in the age group of mid-thirties to forty, a person who has been at work for ten years and is the sole supporter of a family of five. On the basis of these surveys, averages were worked out that are illustrated graphically in the accompanying reports.

For a start, it was conclusively determined that —whichever the province in Pakistan—the middle class constitute people with monthly income ranging between Rs13,000 to Rs 50,000. While most of our study is focused on families on the lowest rung, interesting observations are made about their lifestyle and preferences: For instance, it came to light that the middle class Karachiities spend larger proportion of their income on education of their children; Whereas in an average middle class household in Lahore, food claims the major share of budget. In the smaller provincial capital Quetta, rent and housing eats up greater chunk of an individual’s income while in Peshawar, transportation takes the cake. Whatever is left after covering these basic costs, is then thinly spread to meet other needs.

In terms of the middle class citizens, we are talking here of the third generation since the country’s independence. They fulfil not just the government’s criteria of literate population (an individual who is able to sign his name) but hold at least a Bachelor’s degree or an equivalent; they dwell in lower middle class localities, have access to electricity, gas, and water and in many cases telephone; employ public transport as conveyance with an unusual exception seen in Peshawar, where they seem to afford a small old car or a motorcycle. Majority of such families resides in rented houses or flats, excepting those who still live together in their ancestral houses under the joint family system. But this class of citizen can afford to live mostly on the periphery of the city, involving long distances for commutation to and from their workplace. Typically they endeavour to send their children to private schools with high sounding names, preferably near home, so as to save on commutation cost.

These families have such watertight budget, with each rupee of income marked for an expense, that saving for a rainy day is unthinkable. Where the employer does not extend medical cover for self and family, sickness of a family member is a dreaded episode. These people have to suffer the humiliation of passing the hats around for loans from more fortunate friends or extended family members in case of a contingency. In some, perhaps wiser communities, a system of committees is prevalent, which provides a lump sum amount for purchase of a costlier commodity. Such system is more pronounced in Lahore and Karachi, perhaps due to a more exhibitive culture in these two major cities. Under such a system, a group of people joins hands and pool in a fixed monthly sum of,

say Rs500. Where ten people have pledged contributions, the total amount of Rs5000 received by each member in turns, comes handy. It is a system of forced saving — often initiated by the housewife — but as the rising costs and increasing demands of the family keeps crawling up, saving of this kind is becoming increasingly difficult and such committees often hit the rocks, due to defaults by members.

Many people interviewed confirmed that their parents, though falling in the same category in terms of income group enjoyed a less strenuous existence. A lecturer or a civil servant in officer’s cadre would command a lot more respect for his comparative social and financial standing in the society. By mid career in many instances, they could build up a small house in a locality where today even rented house is beyond the reach of a person in the same position. People who moaned the loss of such pride and privilege, however, acknowledged that the lifestyle was simpler thirty years back with facilities such as TV, washing machines, kitchen appliances or room coolers only rarely to be seen in average middle class households.

It was noted that today, individuals in this class could not simply afford the luxury of spending on impulse. Almost every purchase is planned and budgeted. Interviews with people of such household confirmed that with each passing day, the economic pressure is rising. They find the policies of the government to be regressive with no relief for their class that takes— in their view — the greatest brunt of rising indirect taxes, such as GST on several items. They were found especially worried about the sustained trend of escalation in cost of utilities. They were disenchanted with the annual pay increments of Rs500 or so in the public sector or in some selective private sector organizations. “It’s a joke that is not funny,” said a doctor bitterly. Arif, a lecturer in a local college corroborated, saying: “People are forced into corruption by keeping salaries at unrealistically low levels.” And Habib, an engineer working for a private firm asked bitterly: “Shouldn’t a person who invested 16 years of his life in acquiring education and is prepared to work hard, have a right to a decent, comfortable life?” Habib cannot afford to provide adequate health care for his ailing mother.

But aside from this human dimension to the issue, our surveys indicated quite conclusively that, for all the official claims to the contrary, the rate of increase in cost of living of middle class almost dwarfs the rate of increase in their income. And this is the situation that we call the ‘meltdown of the middle class’. A situation, which gives rise to a reverse flow of population: From middle class to the poor. If it continues to go that way, it is bound to affect the level of consumers’ presence in the local market. A market starved of consumers could hardly hold any promise for producers. And if there is no growth in effective demand, what hope does that hold for the economy to grow or the country to prosper? — Afshan Subohi