Home Covid-19 Covid-19 takes it out on the middle class

Covid-19 takes it out on the middle class

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If you have or are paying for a house or a car, have a refrigerator, washing machine, computer, telephone, have access to health services, education and vacation at least once a year; In other words, it has all the components of modern urban life, but at the same time it fears losing what has been achieved with the current crisis, it is very likely that it belongs to the so-called “middle classes.”

The economic crisis generated by the Covid-19 pandemic has impacted the standard of living of the population with fewer resources, but also the middle-income population, which sees the benefits of their social status at risk, as well as diminished perceptions and power purchase amid great uncertainty.

The closure of establishments and confinement measures due to the health emergency took 12 million people out of the labor market and, of the 32.9 million who keep their jobs, 46% saw their income cut, according to data from the National Institute of Statistics and Geography (Inegi).

After the first impact, the labor market recovered moderately, since 4.7 million people were still out of work as of September, despite the economic reopening. In addition, a part of those who have recovered their employment have done so under conditions of informality, underemployment or with lower wages, which affects household income and consumption, says Gabriela Siller, director of analysis at Banco Base.

According to the study Under pressure: the decline of the middle class, published by the Organization for Economic Cooperation and Development (OECD) at the end of 2019, for Mexicans to belong to that socioeconomic level, monthly income is required in a range from 6,260 to 16,700 pesos.

When evaluating the effects that the pandemic can generate, the National Council for the Evaluation of Social Development Policy (Coneval) estimates that the number of people whose income is insufficient to purchase a food basket may increase between 6.1 and 10.7 million.

The foregoing may drag down the middle-income population, that is, the crisis could cause this segment, which was not poor or vulnerable, to have effects that lead it to find itself in one of these conditions, explains Coneval.

Economic impact

In Mexico, the middle class has experienced financial crises since the 1970s. It is no coincidence that their political attitude tends to be conservative and rejects any alternative that alters their security, say Luis de la Calle and Luis Rubio.

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Catastrophic events in a home, such as the death of the main provider, a serious illness (such as Covid-19) or a deep economic recession (such as the current one) can be decisive factors for that segment to incur poverty, warns Inegi in a study on the middle classes.

These have been affected because part of the people who had a formal job have not recovered it or are now working informally, with a lower income. Others have found work in the formal sector, but with a lower salary or changed their status from permanent to temporary, explains Héctor Magaña,
professor at the Tec de Monterrey, campus Estado de México.

On the other hand, the income of a segment of the middle classes depends on their own businesses that have temporarily closed or went bankrupt. “The lack of support for these businesses also translates into lower income for them, and this hits directly on the purchasing power of the middle class,” adds the expert.

The crisis affects the levels of well-being of the middle classes in aspects such as housing, as they are not sure of being able to pay the rent for the month or the mortgage, or in terms of savings, seeing the need to dispose of them for the emergency, says Raymundo Tenorio, emeritus professor at Tec de Monterrey.

“They have also seen their well-being deteriorate in terms of the anxiety experienced by middle class families every day, due to not being able to cope with spending the day or on food, the replacement of domestic gas, the electricity bill. Or they have seen the need to cancel services such as the internet or pay TV ”, he adds.

Recovery, long and difficult

The challenge of the middle classes in the context of the pandemic is to maintain a source of income, even enduring a reduction in salary, but also looking to work more hours and start from home, says Tenorio.

“Many families of the middle classes have found themselves in the need of entrepreneurship, making flower arrangements, answering surveys, giving classes online or making food,” he says.

The recovery of middle-income households will advance as there is more certainty about the Covid-19 vaccine, which will allow the reopening of some sectors that have remained very restricted, says Héctor Magaña.

However, it will be until early or mid-2021 when the economic conditions of a large part of middle-income households improve compared to this year, specialists agree.







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