People walk near power plant at Saudi Electricity Company's Central Operation Area, south of Riyadh, April 27, 2012.  (photo by REUTERS/Fahad Shadeed )

Must Saudi Government Stanch The Erosion of its Middle Class?

Author: Al-Hayat (Pan Arab) Posted August 16, 2012

Saudi Arabia’s middle class is eroding. That might be acceptable in a country suffering an acute financial or economic crisis, or at least one that is not currently the world’s foremost source of oil, sitting atop the world's greatest known oil reserves.

SummaryPrint Saudi Arabia, a leader of the Arab world and its top oil producer, is watching its middle class erode. This is a problem the government must address for its own stability through combating corruption and inflation, and creating jobs, writes Jameel Theyabi.
Author Jameel Theyabi Posted August 16, 2012
Translator(s)Al-Monitor

But to see the symptoms of this disease afflicting a wealthy nation, a member of the G-20, one aspiring to provide solutions to promote the economic and financial development of other countries? To see that disease racking a country currently leading the world in the dispatching of humanitarian aid, according to UN findings? To see it in a country that readily sends aid and assistance and makes donations to other states even as her own people suffer from poverty and unemployment? It borders on the unbelievable.

The latest reports point to an accelerating erosion of this indispensable social class, something that will put future living standards under strain, if not worse. The Saudi government must acknowledge the reality of this problem, and address it in a transparent manner. It must produce a working plan to guarantee the security and stability of Saudi society, especially in light of the country’s oil wealth.

I only hope that we need not contend with any intellectuals looking to say something provocative by simplifying (or attempting to simplify) a highly complex issue. Likewise, decision makers and relevant government agencies need to be ready to devise suitable plans and implement a governmental and civil mechanism to overcome the manifestations of this crisis. If that crisis should deteriorate, it will have negative implications for the future.

The ongoing erosion of the middle class and the widening of chasm separating social classes, coupled with the halting pace of any official response to these developments, will ultimately produce a situation in which there is no middle ground between the wealthy few and the impoverished masses. This cannot advance the development, strength, security, stability or structure of Saudi society; rather, it would reduce it to a simple hierarchy of masters and servants. All other elements of society would wither under the heel of the wealthy and their opportunistic allies.

Three years ago I wrote an article under the title “The Grave Danger of an Eroding Middle Class.” Nearly two years ago I wrote another article titled “The Middle Class, Once Again.” In both I warned of the severe deterioration being suffered by the middle class, and the widening gap between the rich and the poor.

The middle class acts as a safety valve for any society. As long as the absolute and relative proportions of this class are on the rise, it serves as a main source of stability, oversight, and accountability. It is the principal anchor of social movements, since they are free from that crippling want that is the bane of the working classes. This affords society a measure of independence, constancy and shared responsibility in developing the country and raising calls for accountability. But if the erosion of the middle class continues, many of the ailments afflicting society will worsen and stability will be subjected to a host of dangers.

Over the last few years, Saudis have suffered from predatory markets coupled with lax regulation that combined to destroy their life savings in rotten real estate deals, poor investments like SAWA telecom company, and the collapse of the stock market. Exacerbating the situation are a cluster of problems including excessive bank debt, inflation, unemployment, the absence of equal opportunity, deepening favoritism, and financial and administrative corruption. All this has thrown the average Saudi off balance and plunged him into debt.

Two years ago a report issued by the Federation of Gulf Cooperation Countries’ Chambers of Commerce warned about the emergence of a wide economic chasm separating social classes as a result of inflation, rising prices, declining wages, the inability of local economies to create suitable job opportunities for the citizenry, and the fragile economic and financial foundations upon which the process of individuals’ entry into and exit from the middle class rests.

The Saudi newspaper Al-Sharq conducted a poll last week among Saudi researchers concerning the effects of the decline of the middle class in Saudi society, from social, psychological, security and economic standpoints. In the investigation, the experts warned that the middle class in the Kingdom was deteriorating to the point where it comprised only 30% of the population, as compared to 60% in countries with comparable per capita GDPs.

The middle class in other Arab countries barely exists; one is either wealthy or poor (that is, living beneath the threshold of extreme poverty). An observer of the conditions that have prevailed in certain Gulf States over the last several years will notice that, despite their (unevenly) rising wages, the middle class appears under threat. They confront a number of hardships including the ever-present question: “How did you government officials get so rich?”

No less pressing is the lack of suitable work, the exorbitant prices, and the high rates of unemployment (which persist even as their countries continue to employ millions of foreign workers employed on national projects at the expense of native labor). The state makes no effort to train, educate, or equip its citizens to enter the professional labor market.

The middle class is the bedrock of stability in any country, for it is able to uncover whatever ails society. In a situation where the middle class is rendered impotent the gap between the wealthy and the poor grows apace. Class pathologies may then emerge, resulting in a burden that will weigh down the country and its economic development, however hard it tries to put in place the means for improving living conditions.

Saudi Arabia must therefore acknowledge the root of the problem, just as the institutions and associations of civil society and the media must highlight that problem and contribute to putting forth solutions, rather than relying upon the excuses proffered by government ministries and institutions or the Consumer Protection Agency (itself reduced by the squabbling of its officials). For its part, government institutions and the organs of civil society must expose greedy businessmen, disclose the real rates of unemployment, and implement a national project that will stand up to those working to break and impoverish Saudi society.

To be sure, simple cuts and bruises can be treated even by applying powdered makeup. But the profound class pathologies now upon us can only be remedied by major national surgery.

Read More: http://www.al-monitor.com/pulse/business/2012/08/the-squeezed-middle-saudi-arabias-erosion-of-the-working-class.html

Published London, Pan Arab Established 1946
Language Arabic Frequency daily

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