x Abu Dhabi, UAESaturday 22 July 2017

Mena needs to nurture its crucial middle class

A thriving cohort of educated, hard-working citizens needs to be safeguarded for social stability as the region faces a watershed moment.

The middle class in the Mena region recognises the importance of high-quality school systems. Andrew Henderson / The National
The middle class in the Mena region recognises the importance of high-quality school systems. Andrew Henderson / The National

A vibrant middle class is the mainstay of economic development and political stability. As policymakers across the Middle East strive for both, they are more alert than ever to the importance of supporting a thriving cohort of educated, hard-working people.

A stable middle class will be crucial during this period of the demographic transition of the Middle East and North Africa (Mena), as the large youth population's demands for economic and political inclusion grow louder.

But for the Mena's leaders to cultivate a strong middle class, the first task is to understand who comprises this segment, how they feel about the state of their societies, and what they hope for for their futures. To that end, Booz & Company and its think tank, the Ideation Center, surveyed about 1,450 people in the GCC and North Africa about their attitudes, aspirations and anxieties.

The survey included people whose household income was between 75 per cent and 150 per cent of the national median and/or people who defined themselves as middle class. The survey showed that most middle-class households were relying on a single breadwinner, with the median monthly salary ranging between US$575 (Dh2,110) and $2,600. This salary meets basic needs, with about 20 per cent left over for people to enjoy travel, mobile phones, internet access and recreation, and a further 10 per cent remaining for savings. People in the middle class were pessimistic about the recent past but optimistic about the future.

Two thirds of our survey respondents felt that their standard of living had not improved in the past five years - because of high inflation, few job opportunities and stagnating salaries. They were concerned about political instability (including terrorism), the possibility of another global economic crisis and high inflation.

At the same time, two-thirds of respondents also expected their standard of living to improve in the next five years - and they indicated they would hold their governments to high standards regarding economic development, political reforms, and better education and health systems.

The members of the region's middle class recognise the importance of high-quality school system, with three quarters of respondents saying that an excellent education was important in achieving success.

A majority of those surveyed said they would spend their savings on their children's education, although only a third of the households sent their children to private schools. Satisfaction with local education systems varied, but even among those respondents who were happy with local systems, at least half wanted their children to study overseas.

Unemployment is another critical issue. There are few jobs available for women, who are entering the workforce in greater numbers for the first time, and for young people, whose numbers are growing. Members of the middle class are concerned with the continuing challenges in the job market. When choosing an occupation, job security ranks first in the list of considerations, followed by a good income.

This is surprising, as fewer than 10 per cent of respondents had been laid off in the past five years, despite the global crisis. But these choices could be attributed to the lack of social safety nets protecting them from economic shocks.

Respondents also wanted governments to address health care. Although healthcare systems in Mena countries have improved over the past 30 years, the region is facing a rapid rise in health costs as, among other factors, sedentary lifestyles lead to chronic diseases.

Most respondents have health insurance, but as the needs of the middle class increase, they will demand good-quality care. To support this fundamental need of the middle class, governments must ensure that healthcare systems meet expectations, with emphasis on preventive care and efficiency to curb future costs.

One of the top priorities for Mena governments is to turn the region's "youth bulge" into a sustainable and vibrant middle class.

To do so, they will need to give focused attention to these three issues. But to truly effect change, the governments of the region must also regain the trust of the middle class by increasing transparency and halting corruption. The majority of respondents believed that their governments and public sectors did not release adequate or trustworthy information and that corruption was widespread.

The Mena region is at a watershed moment. Those governments that take action now will reap the benefits for generations to come.

 

A Samer Bohsali is a principal and Karim Abdallah is a senior associate with Booz & Company