Estimating the middle class in Pakistan.
Durr-E-Nayab
The middle class is primarily an urban phenomenon generally
associated with professional occupations, service sector and salaried
jobs. Yet despite a general acceptance of the important economic,
political and social role that the middle class plays in society, the
term itself remains ambiguous and arbitrary. In much of recent
literature the middle class is equated with middle income which does not
reflect what 'class' refers to in classical writings. The
present paper takes a multidimensional approach to measure the middle
class in Pakistan through a weighted composite index that takes into
account all possible factors associated with the concept, including
income, occupation, education, housing and lifestyle. Using the Pakistan
Social and Living Measurement Survey (PSLM) 2007-08, the magnitude of
the middle class in the country, as represented by the 'expanded
middle class', is estimated at around 35 percent of the total
population. The proposed measure of the middle class has a sense of
stability attached to it, making it less susceptible to sudden
inflationary shocks than an income-based measure.
JEL classification: Z13, R20, A14
Keywords: Pakistan, Middle Class, Multidimensional
INTRODUCTION
'Middle class' is one of the most commonly used terms in
social sciences. Despite its frequent use there is, however, no
consensus on what the term exactly implies. Short of the context in
which it is used, it remains ambiguous. It is viewed as the class that
is between, and separates, the lower and the upper classes, that is the
rich and the poor, but there is no agreement on the exact boundaries
that separate them. Most of the definitions and measurements of the
middle class continue to be somewhat arbitrary and vague.
Historically, the concept of 'class' has been there for
long but the very recent interest in the middle class has stemmed from
the emergence of this class in the Asian economies, especially India and
China, which continued to grow even during the global recession.
Consumer spending in the developing Asia continued to grow during a
period when the developed world was struggling to keep their economies
afloat at both the national and household levels. It was an important
development, as the middle class has always been deemed critical to a
country's socio-economic and political growth and ensuing
stability. Hence, not surprisingly, the middle class has held the centre
stage in most economic discourses, and depending on the stage of its
development and state of the economy, the middle class has been
described to be, among other things, 'growing'
'stressed', 'shrinking', 'powerful',
'threatened', 'burgeoning', mobilised',
'rising', or 'marginalised'. In a world of
globalised economies this raises the crucial question, 'who
constitutes the middle class'? An Indian school teacher with an
annual income of $2,500 is considered middle class but for an American
family to earn that title the amount may have to be around $200,000 [Aho
(2009)]. An income-based universal definition of middle class would
therefore be meaningless.
The concept 'upper, middle and lower' class was mainly
developed in sociology in reaction to the more rigid and deterministic
Marxist concept of class, yet the concept to be clear and unambiguous
needs an appropriate definition. The present paper first briefly
describes the different ways of analysing and defining what is meant by
class, and then discusses the importance of the middle class and the
various means of estimating its size. It suggests a refined measure of
estimating the middle class in Pakistan, a measure that captures all
possible aspects of the class given in its various definitions. Finally,
before concluding, the paper also explores the regional and occupational
context of the middle class.
CONCEPT OF CLASS AND THE NOTION OF THE MIDDLE CLASS
As very aptly put by Streans (1979: 377), "The concept
'middle class' is one of the most enigmatic yet frequent in
the social sciences". Part of this difficulty can be ascribed to
the ambiguity regarding the very concept of class. The classical
perspective on the concept of class can be traced back to Karl Marx with
his classification based on the relationship to the means of production
and Max Weber's categorisation on the basis of wealth, prestige and
power. (1) In both Weberian and Marxist traditions there is a rejection
of any simplistic gradational definition of class as they link
people's social relations to economic resources of various kinds.
These schools view social relations as having an impact on the material
interests of people that form the foundation of conflict and cohesion in
society. Marx and Weber, however, basically differ in their theoretical
orientation, reflected in the Marxian notion of exploitation and the
Weberian 'life-chances'.
There is a vast body of literature on the concept of class having
its roots both in the Marxian and Weberian schools of thought with each
arguing about inclusion of certain properties in defining classes. For
instance, classes have been defined by position and role [Mosca (1939);
Pareto (1963)]; authority relations [Dahrendorf (1959)]; status rank
[Warner (1960); Lenski (1966)]; inter-marriage [Schumpeter (1951)];
cross-classification of property and authority [Ossowski (1963); Wright
(1979)]; degree of structuration (2) [Giddens (1973)]; and property,
employment and authority relations [Goldthorpe (1987), Erikson and
Goldthorpe (1992)]. It would not be wrong to state that all these
definitions of class in a broad way follow the Marxian and Weberian
concept of class pursuing their respective notion of
'exploitation' and 'life-chances'--that is,
intra-class conflict leading to 'exploitation' of one by the
other, and class as a source of certain qualities and actions resulting
in the associated 'life-chances'.
Wright (2003, pp. 1-3) provides a useful summary of the different
underlying themes resulting in the variety of class concepts. He divides
these themes in five categories which are as follows:
(1) Subjective position--the way people locate themselves and
others in a social structure characterised by inequalities.
(2) Objective position--distribution of people objectively on a
gradational scale of economic inequality, represented mainly by income
or wealth. This results in classes such as upper class, middle class,
upper middle class, lower class and underclass.
(3) Relational explanation of economic life chance--also
characterising the Marxian and Weberian schools of thought, it explains
inequalities in economic life-chances including standards of living.
Based on the relationship of people to income-generating resources or
assets, class becomes a relational, rather than a gradational concept.
(4) Historical variation in systems of inequality--focussing on the
macro-level instead of micro-level, it explains the variation across
history in the social organisation of inequalities.
(5) Foundation of economic oppression and exploitation--looks into
the nature of changes needed to eliminate economic exploitation within
societies.
Where, then, in the above-mentioned scheme of things does the
middle class fall? In relating it to the means of production, as done by
Marx, we can consider the middle class to be falling somewhere in
between those who own the means of production (the bourgeoisie) and
those who must sell their labour for survival (the proletariat). A class
that came to be referred to as the petty bourgeoisie, includes small
producers/proprietors, like shopkeepers and small manufacturers.
Similarly, in the Weberian notion of class, the middle class can occupy
the mid-position on the continuum of wealth, power and prestige. In the
wealth continuum, the middle class can be represented by individuals who
are neither rentiers nor unskilled labourers. On the power continuum
they can be the people who are not as weak as to carry out the command
of others but not as influential to achieve their goals despite
opposition. Similarly, they cannot be individuals who receive little
respectful treatment nor the ones who are entitled to deferential and
respectful treatment. The middle class is, thus, on the middle rung of
all Weberian continuums.
Sridharan (2004), while analysing the Indian middle class, believes
that the classical approach to the middle class is inadequate for
analysing contemporary societies, especially those in the developing
world. He argues that for over a century the growth of economies,
specifically capitalist ones, has relied on advancements in knowledge
and improvements in the regulatory state machinery leading to a growth
of white-collar occupations, salaried and self-employed, marked by
increasing degree of education. The income of this new group of
professionals normally falls somewhere between those of the capitalists
(the equivalent to Marxian bourgeoisie) and the manual workers (the
Marxian proletariat), and signify the new middle class. The size and
influence of this class has increased with time, affecting the political
and ideological aspects of society. Their significance also grows as
economies move towards the services sector.
This new middle class, however, is not considered a real class by
Wright (1985). He considers it a "contradictory location within
class relations" (p. 9). Wright considers this new class of
professionals and white-collar workers different from the petty
bourgeoisie comprised of small independent producers and shopkeepers.
The relative autonomy of this new middle class, especially in the
developing countries, distinguishes it from other classes--an autonomy
that originates from the possession of skills and say in public affairs.
Bradhan (1989, 1994) shares this view and considers professionals,
including all white-collar workers, as the "dominant proprietary
class" because of the level of human capital manifested in their
higher education, technical expertise and possession of scarce skills.
The dominant proprietary classes, thus, now comprise industrial
capitalists, big farmers and the professionals, both civil and military.
WHAT MAKES MIDDLE CLASS IMPORTANT
The middle class is increasingly considered a precondition of
stability in the social structures, a means of mitigating inequalities
in a society, and a pathway to growth and development. This idea has
gained strength from the events in China and India where the burgeoning
middle class is believed to be holding the future of these countries. It
may be mentioned here that the importance attributed to the role of the
middle class is not a recent phenomenon. For instance, Landes (1989)
talks about England's early dominance in terms of the English
middle class of the 18th and 19th centuries. More recently, Birdsall,
Graham, and Pettinato (2000) consider middle class the backbone of both
market economy and democracy in the face of globalisation. Likewise,
Easterly (2001) after analysing a large number of countries concluded
that nations with a large middle class tend to grow faster, at least in
situations of ethnic homogeneity.
"Thus it is manifest that the best political community is
formed by citizens of the middle class, and that those states are likely
to be well-administered in which the middle class is large.... where the
middle class is large, there are least likely to be factions and
dissension."
Aristotle 306 BC (quoted in Easterly, 2001:1)
The above-stated stabilising role of the middle class originates
from the buffer role it seems to play between the polar tendencies of
the lower and upper classes. Easterly (2001), for instance, shows that a
higher share of income for the middle class is linked with higher
growth, more education, better health and less political instability and
poverty in a society. These qualities make a decline in the middle class
a potential threat to economic growth and political stability. Esteban
and Ray (1999), for example, show an occurrence of more frequent
societal conflict in the presence of a weaker middle class.
The middle class is increasingly seen as a group gaining political
influence that can be associated with the progressively larger role they
are playing in the public and services sectors. The middle class is also
linked with the nature of government a country has, as shown by Moore
(1966) in his classical work associating democracy with the middle
class. This idea is supported by Collier (1999) when he studies various
democracies finding the middle class to have allied with the lower
classes to push for an inclusive political system. On the contrary,
however, he also found instances where the middle class formed an
alliance with the upper class putting up with a restricted democracy or
even a dictatorship. A similar relationship was also found by
Leventouglu (2003) when he observed an ambivalent behaviour of the
middle class during political transition. Depending on the situation,
the middle class could act as an agent of change or work for maintaining
the status quo. If the middle class believed that their children would
retain their middle class status then they would not resent
semi-democracy or even encourage an autocracy to block any
redistribution. On the other hand, if the middle class is not guaranteed
their status they would strengthen the lower class so as to push for
redistribution under democracy. This ambivalent behaviour makes the role
of the middle class even more politically important, and as pointed out
by Acemoglu and Robinson (2003, p. 8-1) the "decisive voters in
democracy are often from the middle class".
All other roles of the middle class granted, including those
discussed above, the most significant is the one that links it with the
growth and development of economy. Banerjee and Duflo (2007) provide a
useful summary of the relationship between the middle class and economy.
Theorising back to Weber and using a vast body of literature, they
delineate three reasons for considering the middle class vital for
economies. These include:
(1) New entrepreneurs emerge from the middle class who create
employment and opportunity of growth for the rest of society.
(2) The middle class with its strong values stresses on the
accumulation of human capital and savings.
(3) The middle class consumer is willing to pay a little extra for
quality, thus, encouraging investment in better quality production and
competitive marketing, which spurs higher level of production and leads
to increasing income for everyone.
All these aforementioned factors make the middle class vital for
any economy. There are, however, words of caution. Singh (2005) and Basu
(2003) while commenting on the middle class consumption pattern warn
that although consumer spending enhances aggregate demand and stimulates
the economy in the short run, it does not necessarily translate into
higher sustainable growth. They also voice concern about the
sustainability of these high levels of consumption, and the depressing
effect they have on savings, and hence consequentially on investment.
MEASURING THE MIDDLE CLASS
After studying the middle class in various countries, Stearns
concluded, "Recent theory does not even include a satisfactory
statement on the size of the middle class, caught as it is between the
dazzling power above and massive numbers below" (1979: 378). The
desire to statistically measure socio-economic phenomenon, like the
middle class, believes Cole (1950), originates from the success of such
exercises in natural sciences. The task of quantification, however, is
much tougher in social sciences due to the complexity and variability of
social realities. Unlike facts in natural sciences, with their universal
applicability, social realities dealt with by social sciences cannot be
generalised even at the micro level, leave alone universally. Despite
this handicap extensive literature can be found studying the middle
class not just theoretically but empirically as well.
For the identification and measurement of the middle class, mainly
two methods are used to define who is included, and who is not, in the
middle class. One way to do it is in relative terms and the other one is
the absolute way. The second issue is the premise of inclusion, be it in
relative or absolute terms. The most commonly used dimension is purely
economic in nature as it bases the rationale of inclusion, or exclusion,
in the middle class solely on personal income or expenditure. There is
however criticism on this over reliance on income and for ignoring other
factors, like occupation, wealth and labour market relations [Goldthorpe
(2010)].
If we look at the various ways of quantifying the middle class, as
presented in Table 1, we find that most of the definitions are absolute
in nature using purely economic rationale for inclusion in the middle
class. The definitions use intervals of income values, with lower and
upper limits, to measure the middle class or define it by using
different median values of income. Apart from having different upper and
lower bounds, there is no major difference in the approach and rationale
used behind these various definitions, as we can see from Table 1. But
despite this lack of difference, varying upper and lower bounds have
serious implications for the estimates they give for the size of the
middle class in any country. This variance in estimates would be seen in
the discussion to follow when all these definitions are applied to
measure the size of the middle class in Pakistan.
It would not be wrong to re-emphasise here the arbitrary nature of,
and the lack of consensus on, the different ways of measuring the middle
class. As is evident from Table 1, there is an absence of agreement on
the upper and the lower limits demarcating the boundaries for the middle
class in the total population, and thus separating it from lower and the
upper classes.
ESTIMATING THE MIDDLE CLASS IN PAKISTAN
This brings us to the question, "How big is the middle class
in Pakistan"? Using the Pakistan Social and Living Measurement
Survey (PSLM), (3) conducted in 2007-08, the paper measures the
magnitude of the middle class by the definitions given above in Table I.
It may be mentioned here that it is a household, and not an individual,
that by all these definitions is categorised as the middle class.
Depending on the definition applied, it is found that the size of the
middle class ranges drastically in the country, as can be seen from
Table 2. Applying the definitions having solely an economic rationale,
we find the middle class to range from 60 percent of the population
(Table 2, Definition One) to being totally non-existent (Table 2,
Definition Five). Translating it in number of people, using the
population base of 187 million as it stands on mid-year 2011 (USCB, 2011
and UN, 2009), the size of the middle class ranges from a huge 112
million to none. This variability, as stressed earlier, reflects the
complexities and arbitrariness associated with defining and measuring
the middle class.
Among all the definitions given above, Definition Eight and
Definition Thirteen, based on gradation of income and expenditure per
person per day, respectively, are currently the most extensively used
measure employed to estimate the middle class (as also used by Chun
(2010) and Bhandari (2010) among others). (4) This definition too,
however, suffers from the same drawback of relying solely on one
criterion. As also pointed out by Eisenhauer (2008), Atkinson and
Bourguignon (1982), Kolm (1977), Bourguignon and Chakravarty (2003) and
Gilbert (2003), being a part of the middle class should be ascertained
by a person's socio-economic attributes holistically. Income is an
important aspect but other qualities like level of health, wealth,
education and specialised knowledge are also significant factors for
constituting a class.
Technically speaking too, most of the definitions suffer from
serious drawbacks. For instance, the 'quintile approach' can
be useful in measuring or comparing income or expenditure growth but
cannot be used as a method to estimate the middle class as the size
cannot shrink or expand and by definition would permanently remain at 60
percent. Any denomination of the median income should also be used with
caution in low income countries like Pakistan. Taking 75 percent of the
median income might lead to the inclusion of people below the poverty
line in countries with very low income levels.
In the above-stated definitions and resulting estimates there are
issues with the lower bounds set for inclusion in the middle class.
While some of the definitions (like Definition Three and Five) set the
limit too high, (5) resulting in a very small middle class or in the
absence of a middle class altogether, there are other definitions that
set the limit too low, like those that set the lower bound at $2 per
person per day. Does the middle class begin where poverty ends?
Ravallion (2010: 446) supports, "the premise that middle class
living standards begin when poverty ends". This paper, however,
supports the argument forwarded by Horrigan and Haugen (1988:5) when
they posit, "to ensure that the lower endpoint of the middle class
represents an income significantly above the poverty line". The
middle class should, hence, include only those households that do not
face the risk of experiencing poverty at all, and are not just those who
are outside the realm of poverty at a particular time.
As also pointed out by Tilkidjiev (1998), it is not sufficient to
be wealthy to be in the middle class, this paper also premises that
'middle income' should not be considered 'middle
class'. The middle class has a multidimensionality attached to it
and any useful measure should attempt to capture it. The middle class
has certain intellectual, political and social connotations, along with
economic ones, that differentiate it from the middleincome. While
middle-income is purely an economic term, the middle class falls more in
the sociological domain. The concept of class has many dimensions,
including the economic, like wealth, income and occupation; political,
including status and power; and cultural, such as values, beliefs,
lifestyle, and education.
A REFINED MEASURE PROPOSED TO ESTIMATE THE MIDDLE CLASS IN PAKISTAN
Taking all the aforementioned factors into consideration, a refined
measure of estimating the middle class is proposed using a weighted
composite index. The suggested measure is a combination of relative and
absolute approaches applied to estimate the middle class, and the
rationale is not solely economic but a collection of various
socioeconomic factors. After the formation of the sub-indices, the
Principle Component Analysis (PCA) was carried out to calculate the
weights given to each component of the composite index. The calculation
of these sub-indices followed an absolute approach, while the final
gradation of the resulting composite index into different classes was
done with a relative approach.
The suggested components of this composite index, their rationale
and the method used to measure them are as follows:
(1) Educational Index: In today's world, college education is
the minimum for any individual to succeed [Wheary (2005)]. With its low
literacy levels, the presence of even one person with college education
(completed or currently in college) in a household qualifies it to be
categorised as middle class. Quantification of the index: at least one
individual in the household with college education= 1, no one in the
house has college education = 0.
(2) Income Index: (6) Instead of using any upper and lower bounds
or any percentage of median income, due to the shortcomings stated
above, a household income of double the poverty line definition is used
to form the Income Index. Being twice as much away from the poverty
line, these households are believed to be facing minimised risk of
poverty. The national poverty line was used for this purpose by
inflating the officially accepted available poverty line to the year
2007-2008, which came up to Rs 1084.20 per person per month.
Quantification of the index: Households income is more than double
the poverty line (i.e., number of persons in the household x double the
poverty line per person) = 1, household income below double the poverty
line= 0.
(3) Housing Index: Possession of a house is vital for the middle
class status [Brandolini (2010), Banerjee and Duflo (2007), Wheary
(2005)]. Considering most of the houses in Pakistan are self-owned, in
order to differentiate between the classes, the housing index was
disaggregated into ownership, persons per room, and availability of
water, gas and electricity in the house.
Quantification of the index: (i) ownership of the house = 0.3,
otherwise = 0 (ii) number of persons per room--1 = 0.4, 2 = 0.3, 3 =
0.2, 4 = 0.1, >4 = 0 (iii) availability of electricity = 0.1,
otherwise = 0 (iv) availability of tapped water in the house = 0.1,
otherwise = 0 (v) availability of gas = 0.1, otherwise = 0. All the
sub-components adding to a maximum of 1 and a minimum of 0.
(4) Lifestyle Index: The middle class is associated with a certain
lifestyle associated with expenditure on consumer durables--one of the
primary reasons for considering the class a boon for the economy. These
consumer durables also form part of the movable assets possessed by the
household. The PSLM asks the households about the ownership of
twenty-three consumer items and this index includes all of them. (7)
Quantification of the index: Each item owned = .0435. All the
sub-components adding to a maximum of 1 and a minimum of 0.
(5) Occupation Index: After income, occupation is considered as the
most important factor affecting any individual's or
household's class categorisation. Occupations were divided into two
categories in this index, namely, manual occupations and non-manual
occupations. A drift away from manual occupations is deemed imperative
to be in the middle class in a vast body of literature, including
Brandolini (2010), Gigliarano and Mosler (2009), Beteille (2001), Grant
(1983) and Cole (1950).
Using the detailed Pakistan Standard Classification of Occupations
typology, as used in the PSLM, occupations were classified as being
manual or non-manual. These two categories could be equated to the
traditionally used terms of white collar and blue collar works,
respectively. White collar occupations refer to office/desk work like
the ones performed by those involved in professional, administrative and
managerial jobs. Blue collar occupations, on the other hand, are those
where the workers do manual jobs like those carried out by labourers in
mining, construction or agriculture or the ones who operate/assemble any
machine.
Quantification of the index: If the occupation of the head of the
household or the person earning the most in the household is non-manual
= 1, otherwise= 0.
The sub-indices, comprising the composite index, were then weighted
through the PCA method and their scores were added up to give the total
score for the households. The households were then categorised into
seven classes based on their total scores on the index. Excluding the
top 10 percent of the population (0.5 points on the composite index, in
a maximum total score of 5.0) the remaining index score was divided into
six equal classes (of 0.75 points each) to avoid arbitrariness, giving
us the following class composition in the population:
(i) Lower lower class (LLC) < 0.75
(ii) Middle lower class (MLC) 0.75-1.5
(iii) Upper lower class (ULC) 1.5-2.25
(iv) Lower middle class (LMC) 2.25-3.0
(v) Middle middle class (MMC) 3.0-3.75
(vi) Upper middle class (UMC) 3.75-4.5
(vii) Upper class (UC) > 4.5
Table 3 presents the weights assigned to each of the sub-index and
the mean score achieved by the different classes on each index, and in
total. The table presents an interesting trend with the 'Lifestyle
Index', based on a household's possession of consumer durables
carrying the maximum weight, followed by indices of income, education,
housing and occupation. Is lifestyle the most distinctive factor in
class differentiation? The answer would probably be in the affirmative
if we look at the factors differentiating the UMC and UC, where the main
difference between the two is for the Lifestyle Index. In this regard,
it is also worth noting that housing and lifestyle indices are the ones
that carry scores even for the lowest of classes, even when they score
poorly on the income, occupation and education indices (see Table 3). As
expected, as we go up the classes, households begin to score on all
indices. (8) The upper middle class is almost similar to the upper
class, as can be seen from the similar mean scores on the indices for
income, education and occupation. The differences in the lifestyle and
housing indices, however, separate the top two classes, as can be seen
in Table 3.
Class structure as calculated by the composite weighted index shows
that a large majority of the people in Pakistan falls in the lower
classes, be it lower lower class (LLC), middle lower class (MLC) or
upper lower class (ULC), as can be seen from Table 4. This trend is
mainly due to the rural areas that are predominantly concentrated in the
lower classes. A moderate proportion (33 percent) in the urban areas,
however, can be categorised as belonging to the middle class (LMC, MMC
and UMC put together). The biggest class, nevertheless, remains the LLC
be it the urban or the rural areas (Table 4), and because of the very
low index score it would not be inappropriate to label this category as
'deprived'. If we look at the index scores of the MLC, which
is the second largest class, in Table 3, we find the households to be
scoring on all sub-indices, unlike the LLC. These households can be
considered the 'aspirants' for upward mobility. The next
class, ULC, shows a marked improvement on all sub-indices (Table 3) and
can rightfully be called a class of 'potential climbers'. If
we look at their total index score, they are found to have crossed the
mean score of the sample (1.36) with a score of 1.8 (see Table 3), and
with a little arbitrariness in demarcating the class boundaries can be a
part of the middle class.
The middle class, as observed earlier, seems to be more of an urban
phenomenon (Table 4) which is not surprising in the light of the poor
literacy levels and the large association with manual jobs in the rural
areas. Even in cases where the households score well on the income and
housing indices, their scores go down because they perform badly on the
education and occupation indices. Among the middle classes the LMC,
termed as the 'Fledgling Middle Class', constitutes the
largest share in both the urban and the rural areas (Table 4). In the
urban areas, however, the size of the 'Elite Middle Class',
that is the UMC, is bigger than the 'Hardcore Middle Class'
(MMC)--a pattern not found in the rural areas. As expected, the size of
the UC is small, being even smaller in the rural areas than the urban.
Sridharan (2004) advocates the inclusion of ULC and UC while
demarcating the boundaries for what he refers to as the 'Broadest
Middle Class'. Considering the stringent measurement method
suggested to estimate the middle class in this paper, it makes sense to
include at least the ULC in what is referred to as the 'Expanded
Middle Class' here (see Table 5). This becomes even more logical
for the reason stated above regarding the ULC having a composite index
score crossing the midline. Using the 'Strict Middle Class'
category, the middle class is found to be comprising one-fifth of the
country, a proportion that increases to one-third if we take into
account only the urban areas. Adding the 'Potential Climbers'
to this estimate boosts the proportion of those in the middle class to
35 percent, swelling the urban middle class size to over half the
population (54 percent), as can be seen from Table 5. The 'Broadest
Middle Class' shows only a marginal increase in the share of the
middle class in the total population as those in the
'Privileged' class comprise a very small proportion (Table 4).
Numbers are easier to comprehend than proportions. Hence, if we
look at the numbers constituting the middle class in Pakistan we find
the numbers to increase from 34 million (Strict Middle Class) to over 61
million (Broadest Middle Class) by widening its scope (Table 5).The
middle class being more urban centric, as we saw in Table 4, amounts to
nearly 39 million people if we go by the measure provided by the
'Broadest Middle Class' definition in Table 5. The present
paper, however, prefers to subscribe to the 'Expanded Middle
Class' estimate as representing the middle class in Pakistan. The
UC has its peculiar characteristics and position in any society and
should not be grouped with other classes. On the other hand, inclusion
of the 'Potential Climbers' in the 'expanded middle
class' is rationalised on the basis of closeness between the two
classes. It is from this class that the households make the transition
from having a deficit budget to a surplus one, a characteristic deemed
essential by many [including, Brandolini (2010); Birdsall, Graham, and
Pettinato (2000); Andersen (1992)] to be classified as the middle class.
(9) The size of the middle class in Pakistan, using the 'Expanded
Middle Class' categorisation, comes up to a substantial 61 million
people.
It would be of interest to note how the size of the middle class
estimated through the composite index compares with the most common
prevailing method of measuring it. This is based on the gradation of the
household's per person per day expenditure (Definition Thirteen in
Table 2). As opposed to the latter, the composite index shows a much
larger LLC and MLC, as can be seen in Figure 1. The only other class
comparatively larger in the composite index is that of the UMC. The size
of the UC, interestingly, remains the same in both the measures at a low
0.4 percent. Despite giving an estimate for the middle class that is
much bigger and hence more attractive, this paper argues that measuring
the middle class only on the basis of expenditure or income is
insufficient as it does not encompass all the factors that contribute
towards making a household a 'middle class household'. It is
also premised that 'class' is quite a permanent category which
cannot be affected by the mere fluctuation of income or expenditure. We
would not go to the extreme of subscribing to the notion that
'class is permanent', as class mobility does and should take
place, but it is not as impermanent to be altered by fickle changes in
income or expenditure.
Can we consider a household with only manual workers or with no
individual having college education but having over PPP $2 per person
per day income middle class in today's world? Following how the
middle class is generally perceived, the answer in all probability would
be in the negative. Figure 2 presents the comparison between the two
measures, the composite index and the prevailing definition, on the
nature of occupation and presence of a college graduate in the
households belonging to different classes. The estimate through the
weighted composite index appears more appropriate with those in the
'elite middle class' and the 'privileged class'
being employed solely in non-manual occupations (Figure 2-Bii) and
having at least one college graduate (Figure 2-Aii) in the household. On
the contrary, the prevailing definition shows a substantial proportion
doing manual jobs (Figure 2-Bi) and having no college graduate (Figure
2-Bi) in the household, something that cannot be associated with the
middle class nowadays. Such a trend is, however, expected when only
income or expenditure form the basis of the classification.
For the sake of comparison, it would have been an interesting
exercise to apply the proposed methodology to estimate the size of the
middle class to other countries in the region as well. Lack of access to
household level data in these countries, however, hampered this effort
at present. Nevertheless, if we compare the size of the middle class in
the South Asian region, estimated by various current studies using the
prevailing definition based on expenditure levels (Definition Thirteen
in Table 1), we find the size of the middle class to be the largest in
Pakistan with the exception of Sri Lanka (see A-9). In a comparable year
of 2004-05, the size of the middle class in Pakistan was 40 percent of
the total population while that of India was 25 percent (see A-9).
WHERE IS THE MIDDLE CLASS PRESENT IN PAKISTAN? REGION AND
OCCUPATION
Once the middle class has been identified, it is of interest to see
where those belonging to this class are present, geographically and
sectorally. The provinces of Punjab and Sindh, having over 36 percent
middle class households, fare better than the provinces of Khyber
Pakhtunkhwa (KP) and Balochistan that marginally lag behind at 32 and 28
percent, respectively (see Table 6). (10) When we look at the regional
comparisons, we observe the national level pattern to be replicated at
the provincial level as well. The size of the middle class is estimated
to be much bigger in the urban areas as compared to the rural areas in
all four provinces (Table 6), strengthening the argument that the middle
class is more of an urban phenomenon. If we look at the inter-provincial
differences, we find the size of the middle class to be positively
associated with the proportion of the urban population in that province.
The province of Sindh has the highest proportion of urban population and
that of the middle class (56 percent) in the urban areas as well, as can
be seen in Table 6. The provinces of Punjab, Balochistan and KPK have
progressively smaller share of the population living in the urban areas
and the size of their middle class reflects it through the estimated
measures for the class at 55 percent, 50 percent and 49 percent,
respectively. Although not having a one to one correspondence, an
increasing urban concentration seems to aid the increase in the size of
the middle class. On the contrary, the size of the middle class in the
rural areas in all four provinces, as shown in Table 6, is much smaller
than their urban counterparts.
Any discussion on class is incomplete without investigating the
relationship between class and occupation, as also stressed by Banerjee
and Duflo (2007), Goldthorpe and McKnight (2006), Wright (1997), Erikson
and Goldthorpe (1992). If we look at the nature of occupations within
each of the estimated classes, we see that the LLC comprises mostly
occupations like agriculture and fisheries, crafts and related trades,
plant and machine operators and assemblers and other elementary
occupations, as can be seen in Table 7. From the ULC onwards the
occupational distribution exhibits a larger spread that tapers again for
the highest two classes, the UMC and UC, which are confined to
occupations like the armed forces, legislators, senior officials and
managers, professionals, technicians and associate professionals, clerks
and service and sales workers (Table 7). Thus, as we go up the class
ladder the occupational share shifts from manual to non-manual jobs,
which to some is the very essence of the middle class. (11)
Worth noting in Table 7 are the occupational distributions for the
'elite middle class' and the 'privileged' class that
are heavily tilted towards professionals and those associated with
services. This trend, observed for the middle class globally, can be
best summarised in the words of Banerjee and Duflo (2007: 21) when they
say,
"Nothing seems more middle class than the fact of having a
steady well-paying job. While there are many petty entrepreneurs among
the middle class, most of them do not seem to be capitalists in waiting
..... If they could only find the right salaried job, they might be
quite content to shut their business down ..... Perhaps the sense of
control over the future that one gets from knowing that there will be an
income coming in every, month--and not just the income itself--is what
allows the middle class to focus on building their own careers and those
of their children."
Is there any industrial variation vis-a-vis distribution of middle
class in Pakistan? Table 8 shows that two industries, namely, of
wholesale, retail trade, hotel and restaurants, and those comprised of
community, social and personal services, have a heavy share of the
'expanded middle class'. It is interesting to find out that a
noticeable share of the 'elite middle class' and the
'privileged' class is employed in manufacturing, financing,
insurance, real estate and business services (Table 8). Not
surprisingly, the LLC has a big share employed in agriculture, forestry,
hunting and fishing. (12)
Relationship with the means of production has been a recurrent
theme in the literature on class. As discussed earlier, the Marxian
tradition considers this as the very foundation of class formation.
Table 9 aims at looking into this very relationship and presents the
shares of different statuses in employment within different classes.
Large shares of paid employees in the 'expanded middle class'
and the 'privileged' class tend to negate the relationship
postulated by Marx regarding ownership of the means of production and
class. As can be seen from Table 9, paid employees constitute 78 percent
of the households in the UC. The Marxian notion can be seen to play some
role in the increasing share of those who are self-employed in the
non-agricultural sector in the 'expanded middle class' and
those who employ more than 10 employees in the hard-core middle class,
the elite middle class and the privileged class. (13)
CONCLUSIONS
Social realities are difficult to define, even tougher to measure
and quantify, and the term 'middle class' is no exception.
Just like 'poverty', it is variously defined in different
countries at different levels of development. The definitions differ
with the variance in approach and rationale applied in addressing the
concept, thus leading to a lack of consensus in what the term actually
means. The only agreement regarding the term 'middle class' is
that it is the class between the lower and the upper class but where
these lines are demarcated among them remains a debatable issue.
Classifications made on cut-off lines based on income or expenditure
continue to be the most commonly used way of measuring classes, and
arbitrariness remains the hallmark of all these definitions. This
arbitrariness is reflected in the range of estimates given for the
middle class, varying from zero percent to 60 percent. The present
paper, however, considers these definitions inadequate to capture the
whole concept of the middle class, and suggests a weighted composite
index to estimate its size.
The suggested measure is a composite of five weighted sub-indices
of factors believed to be important for being part of the middle class,
namely, education, occupation, income, lifestyle and housing. Using the
'expanded middle class' concept, it is estimated that Pakistan
has a middle class that is around 35 percent of the total population,
which approximates to a substantial 61 million. The middle class is
found to be more of an urban phenomenon with its size being much larger
in the urban areas at both the national and the provincial levels. A
striking feature, however, is the association found between the
professional occupations and the upper middle and upper classes. This
fits in well with the general belief that professional occupations
constitute, what in this paper has been referred to as, the elite middle
class. Other white-collar occupations are taken up by the hard-core and
fledgling middle class, and the manual occupations comprise the
'deprived' and the 'aspirants'. Likewise, the middle
class is expected to have sufficient resources to fulfil all their needs
and at least some of their wants, and have a surplus for savings. This
criterion works for the estimated middle class in this paper as well and
provides the very rationale of including 'potential climbers',
who show a surplus/saving trend, in the 'expanded middle
class' category.
It would be of interest to carry out a comparative study in the
South Asian region using the proposed multidimensional approach to gauge
the actual size of the middle class. However, using the existing
definitions, when compared to its neighbours, barring Sri Lanka,
Pakistan has a bigger middle class than all other countries including
India. Of course, the Indian middle class would be bigger in numbers
given its much larger population size but it comprises a smaller
proportion that falls in the middle class category. Hence, harnessing
the gains that are associated with having a big middle class are
potentially available to the country. Is the middle class shrinking in
Pakistan? Due to the recent inflationary trends, it is a fear that is
much voiced in Pakistan, as in many other countries. For the period
covered, however, applying the most commonly used existing definitions,
the answer to this question is in the negative. The middle class in
Pakistan has actually grown over time (see A-9). Likewise, the
multidimensional definition of class proposed in this paper has a sense
of stability linked to it, making the middle class less susceptible to
fluctuations in income or expenditure. By differentiating between the
concept of 'middle class' from that of 'middle
income', we can understand why the inflationary trends do not have
an immediate effect on class structure, and hence the middle class.
Otherwise as well, since all the factors linked to being a part of the
middle class, reflected in their inclusion in the proposed weighted
composite index, show an increasing trend over time in Pakistan, the
size of the middle class is bound to increase in the country. The
scenario cannot be better described than in the words of Burke (2010)
when he uses the analogy of the car, Suzuki Mehran, for the middle class
in Pakistan and says,
"In Pakistan, the hierarchy on the roads reflects that of
society. If you are poor, you use the overcrowded buses or a bicycle.
Small shopkeepers, rural teachers and better-off farmers are likely to
have a $1,500 Chinese or Japanese motorbike .... Then come the Mehran
drivers. A rank above them, in air-conditioned Toyota Corolla saloons,
are the small businessmen, smaller landlords, more senior army officers
and bureaucrats. Finally, there are the luxury four-wheel drives of
'feudal' landlords, big businessmen, expats, drug dealers,
generals, ministers and elite bureaucrats. The latter may be superior in
status, power and wealth, but it is the Mehrans which, by dint of
numbers, dominate the roads."
ANNEX
A-1. Class Structure Based on Income and Occupation
Typical Occupations Typical Income
Investors Heirs
Executives 1% $2.0 Million
Capitalist Class
Upper Manager
Professionals
Medium-sized Business
Owners 14% $150,000
Upper-Middle Class
Lower Managers
Semiprofessionals
Craftsmen, Foremen 30% $70,000
Middle Class
Low-skill Manual
Clerical
Retail Sales 30% $40,000
Working Class
Lowest-paid manual,
retail, and service
workers 12% $25,000
Working Poor
Unemployed co-part-
time menial jobs,
public assistance 12% $15,000
Underclass
Source: Gilbert (2003, p. 8).
A-2. Contribution of Each Sub-index in the Total Weighted Composite
Index for Each Class
Lifestyle House Income Occupation Education
LLC 0.186 0.267
MLC 0.268 0.462 0.016 0.336 0.014
ULC 0.324 0.526 0.329 0.483 0.140
LMC 0.364 0.496 0.554 0.720 0.528
MMC 0.451 0.661 0.941 0.683 0.564
UMC 0.494 0.682 1.050 0.862 1.004
UC 0.802 0.870 1.050 0.865 1.005
Source: Calculated from PSLM 2007-2008.
Note: Table made from bar graph.
A-3. Share of the Sub-indices in the Total Score for Each Class
Estimated by Weighted Composite Index (%)
Lifestyle House Income Occupation Education
LLC 41.11 58.89
MLC 24.46 42.14 1.50 30.62 1.27
ULC 17.99 29.21 18.25 26.79 7.76
LMC 13.67 18.62 20.80 27.05 19.85
MMC 13.67 20.03 28.52 20.70 17.08
UMC 12.08 16.66 25.66 21.07 24.53
UC 17.46 18.95 22.86 18.84 21.88
Source: Calculated from PSLM 2007-2008.
Note: Table made from bar graph.
A-4: Mean Annual Household Income-Expenditure Balance by Different
Classes as Estimated by Weighted Composite Index
(in '000 Pak. Rs.)
LLC, -6
MLC, -19
ULC, 13
LMC, 22
MMC, 69
UMC, 108
UC, 184
Source: Calculated from PSLM 2007-2008.
Note: Table made from bar graph.
A-5: Method to Calculate Numbers in Each Class from the Proportions
Achieved from Weighted Composite Index
The middle class status is assigned to a household and not an
individual. Hence, the proportion estimated to be in each class is in
fact the proportion of households and not the number of persons in a
population belonging to any particular class. Instead of a crude
estimation of numbers from the calculated proportions in all classes,
the size of every class was measured according to the respective mean
household size found in each class. The mid-year population of 187.2
million in 2011 was used as the base year for estimating the size of the
middle class. The rural-urban ratio found in the sample, and applied in
this calculation, was 60:40. The size of the middle class in Pakistan
has generally shown a growing trend (see A-9), so applying the 2007-2008
estimates to 2011 population can give an under-estimation/minimum size
but not an over-estimation. Otherwise too, the composite index would be
only marginally affected by short run changes in income or expenditure.
The mean household size for each class used to calculate the
numbers in different classes, by region, is as follows:
Mean Household Size
Class Total Urban Rural
Lower Lower (LLC) 7.43 7.53 7.40
Middle Lower (MLC) 6.80 6.66 6.90
Upper Lower (ULC) 6.69 6.75 6.62
Lower Middle (LMC) 7.08 6.66 7.76
Middle Middle (MMC) 5.72 5.65 5.99
Upper Middle (UMC) 5.94 5.75 7.19
Upper (UC) 5.60 5.49 6.80
Total 6.97 6.68 7.18
Source: Calculated from PSLM 2007-2008.
A-6. Class Distribution within Occupations (%)
Classes Estimated by
Composite Weighted Index
Lower Middle Upper
Occupations Lower Lower Lower
Armed Forces 0.0 34.8 21.7
Legislators, Senior Officials and Managers 0.0 2.6 6.4
Professionals 0.0 11.1 13.7
Technicians and Associate Professionals 0.0 21.4 24.1
Clerks 0.0 16.5 26.7
Service Workers and Shop/Market Sales Workers 0.0 37.8 32.5
Skilled Agriculture and Fishery Workers 67.0 17.0 11.7
Crafts and Related Trade Workers 51.2 24.0 18.7
Plant and Machine Operators and Assemblers 59.5 22.8 13.7
Elementary Occupations 75.0 15.8 7.4
Classes Estimated by
Composite Weighted Index
Lower Middle
Occupations Middle Middle
Armed Forces 18.8 5.8
Legislators, Senior Officials and Managers 11.3 16.4
Professionals 29.2 12.9
Technicians and Associate Professionals 24.8 9.5
Clerks 27.5 12.3
Service Workers and Shop/Market Sales Workers 15.4 7.6
Skilled Agriculture and Fishery Workers 2.5 1.9
Crafts and Related Trade Workers 3.0 3.0
Plant and Machine Operators and Assemblers 2.2 1.6
Elementary Occupations 1.1 0.0
Classes Estimated by
Composite Weighted Index
Upper Upper Total
Occupations Middle
Armed Forces 15.6 2.9 100.0
Legislators, Senior Officials and Managers 57.2 6.1 100.0
Professionals 30.1 3.1 100.0
Technicians and Associate Professionals 19.7 0.6 100.0
Clerks 17.6 0.2 100.0
Service Workers and Shop/Market Sales Workers 6.3 0.5 100.0
Skilled Agriculture and Fishery Workers 0.0 0.0 100.0
Crafts and Related Trade Workers 0.0 0.0 100.0
Plant and Machine Operators and Assemblers 0.2 0.0 100.0
Elementary Occupations 0.0 0.0 100.0
Source: Calculated from PSLM 2007-2008.
A-7. Class Distribution within Industries
Classes Estimated by
Composite Weighted Index
Lower Middle Upper Lower
Occupations Lower Lower Lower Middle
Agriculture, Forestry, Hunting 70.4 15.7 9.9 2.1
and Fishing
Mining and Quarrying 56.3 17.2 1.1 11.5
Manufacturing 42.7 20.1 16.5 7.3
Electricity, Gas and Water 17.6 21.1 26.5 15.2
Construction 72.5 15.5 7.6 2.0
Wholesale and Retail Trade, and 11.7 31.2 29.4 13.7
Hotel/Restaurants
Transport, Storage and Communication 56.1 21.1 12.6 4.2
Financing, Insurance, Real Estate
and Business Services 5.4 8.8 18.4 16.5
Community, Social and Personal 18.5 23.5 19.7 17.0
Services
Classes Estimated by
Composite Weighted Index
Middle Upper Upper Total
Occupations Middle Middle
Agriculture, Forestry, Hunting 1.6 0.3 0.0 100.0
and Fishing
Mining and Quarrying 3.4 9.2 1.1 100.0
Manufacturing 4.8 8.0 0.6 100.0
Electricity, Gas and Water 7.8 11.3 0.5 100.0
Construction 1.1 1.2 0.1 100.0
Wholesale and Retail Trade, and 7.5 5.9 0.6 100.0
Hotel/Restaurants
Transport, Storage and Communication 2.4 3.4 0.1 100.0
Financing, Insurance, Real Estate
and Business Services 16.5 31.0 3.4 100.0
Community, Social and Personal 6.9 13.5 0.8 100.0
Services
Source: Calculated from PSLM 2007-2008.
A-8. Class Distribution by Status of Occupation (%)
Classes Estimated by
Weighted Composite Index
Lower Middle Upper Lower
Status of Occupation Lower Lower Lower Middle
Employer with < 10 employees 13.6 15.2 22.7 19.7
Employer with > 10 employees 8.4 6.3 4.2 17.9
Self-employed non-agriculture 19.8 29.0 25.3 13.0
Paid Employee 42.0 20.0 15.2 9.4
Unpaid Family Worker 57.1 42.9 0.0 0.0
Own Cultivator 59.7 19.5 15.3 3.2
Share Cropper 88.6 8.4 2.3 0.7
Contract Cultivator 74.3 10.7 11.2 1.9
Own Livestock 72.4 18.7 6.8 1.0
Classes Estimated by
Weighted Composite Index
Middle Upper Upper Total
Status of Occupation Middle Middle
Employer with < 10 employees 15.2 13.6 0.0 100.0
Employer with > 10 employees 25.3 35.8 2.1 100.0
Self-employed non-agriculture 6.6 5.7 0.6 100.0
Paid Employee 4.5 8.2 0.6 100.0
Unpaid Family Worker 0.0 0.0 0.0 100.0
Own Cultivator 2.2 0.1 0.0 100.0
Share Cropper 0.0 0.0 0.0 100.0
Contract Cultivator 1.9 0.0 0.0 100.0
Own Livestock 1.0 0.0 0.0 100.0
Source: Calculated from PSLM 2007-2008.
A-9: Size and Composition of the 'Strict Middle Class' in the
South Asian Region(%)
$2-$4 $4-$10 $10-$20
Pakistan 2005 32.9 6.6 0.6
Pakistan 2008 32.4 9.8 1.3
Bangladesh 16.4 3.5 0.4
Nepal 16.7 5.3 0.9
Sri Lanka 37.8 18.7 2.7
India 20.5 4.15 0.4
Source: Chun (2010) except for Pakistan 2008, which was calculated
from PSLM 2007-2008.
Note: Table made from bar graph.
Author's Note: The author would like to express her gratitude
to Dr Rashid Amjad, Vice-Chancellor, PIDE, Mr Hasan Rabay and the
anonymous referees for their comments on an earlier draft of this paper.
The author is also thankful to Dr Nadeem Ul Haque, former
Vice-Chancellor, PIDE, for motivating her to take up this topic. Usual
disclaimer applies.
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Wheary, J. (2005) Measuring the Middle Assessing What It Takes to
Be Middle Class. New York: Demos: Working Paper.
Wright, E. O. (2003) Social Class. In G. Ritzer (ed.) Encyclopaedia
of Social Theory. Sage Publication.
Wright, E. O. (1997) Class Counts: Comparative Studies in Class
Analysis. Cambridge: Cambridge University Press.
Wright, E. O. (1985) Classes. London: Verso Press.
Wright, E. O. (1979) Class Structure and Income Determination. New
York: Academic Press.
Yuan, Z., G. Wan, and N. Khor (2011) The Rise of the Middle Class
in the People's Republic of China. Manila: ADB Economics. (Working
Paper 247).
(1) For a useful summary on both schools of thought read Wright
(2003).
(2) Giddens proposed that what humans do is dependent on the
pre-existing social structures that are governed by norms. All human
actions are restricted by the elements that create the social
structures. Giddens believed that structures (traditions, institutions
and expectations) are universally steady but could be changed mainly by
some unintentional consequences of action, for instance, when people
begin to pay no attention to the social norms, replace them, or follow
them in a different way.
(3) The Pakistan Social and Living Standard Measurement (PSLM)
survey is a nationally representative survey conducted annually by the
Federal Bureau of Statistics (FBS). It was used for this study as it
covers all the areas that were needed to be included in the composite
index formulated to measure the middle class in the country, namely:
education; income; occupation; housing; and possession of household
durables that were to be included in the lifestyle sub-index. The PSLM
2007-2008 included 15512 households from 1113 urban and rural Primary
Sampling Units (PSU).
(4) These definitions have been used to estimate the much-quoted
Indian middle class to be as big as 250 million. Pakistan's around
80 million compares well with its neighbour's middle class.
(5) The much talked about Indian middle class also disappears
following this definition, indicating the futility of applying it to the
developing economies.
(6) Income Index was created instead of an Asset Index, which by
some is considered a better indicator of security against vulnerability
[Sorenson (2000); Brandolini, Magri, and Smeeding (2010); and Bradhan
(1989)l, because of the nature of the topic understudy and inclusion of
some of the asset variables in other indices. For instance: ownership of
house was part of the Housing Index; possession of movable-durable
assets was included in the Lifestyle Index; and non-material assets,
like higher education, was a part of the Education Index.
(7) The consumer durables included in the PSLM include:
refrigerator, freezer, air cooler, fan, geyser, washing machine, camera,
microwave, cooking range/stove, heater, bicycle, car/vehicle,
motorbike/scooter, TV, cassette player/radio, VCR, vacuum cleaner and
sewing/knitting machine.
(8) See Figure A-2 in the Annexure for the graphic representation
of the composite index, and its components, for each class. See also
Figure A-3 for the percentage share of each component index in a
particular class's total score on the composite index. Interesting
to see in the latter graph is the appearance, and increasing size, of
indices, as opposed to a few indices having a major share.
(9) For the graphic representation of households' income,
expenditure and the balance between two see A-4. As can be seen from the
graph, the 'Deprived' and the 'Aspirants' have a
deficit budget and the trend reverses for the 'Potential
Climbers', justifying the inclusion of the latter in the
'Expanded Middle Class'.
(10) The share of households covered in the PSLM sample from the
province of Punjab, Sindh, Khyber Pakhtunkhwa and Balochistan is 44
percent, 23 percent, 19 percent and 14 percent, respectively.
(11) To find how class distribution varies by different occupations
see Table A-6 in the Annexure. The share of the middle class,
specifically the 'elite middle class', is much higher among
professionals, legislators, senior officials and managers. Elementary
occupations and those related to agriculture and crafts are dominated by
the lower classes, with none of them making to the upper class. It is,
however, worth noting to find a substantial proportion (25 percent
altogether) of the professionals to be there in the lower classes. On
further declassification of occupations it was found that majority of
these 'professionals' were working as teachers, indicating the
low remunerations to those working in the education sector in the
country. Not surprisingly, the UC is almost confined to the armed
forces, professionals, legislators, senior officials and managers.
(12) To find out the distribution of classes in each industry see
Figure A-7 in the Annexure. With a big proportion of the population
falling in the LLC it is expected to find them having big shares in
almost all of the industries. Worth noticing in this table, however, is
the dominance of the 'expanded middle class' in the industry
comprising financing, insurance, real estate and business services,
proving the observation of Banerjee and Duflo (2007), stated above,
valid in Pakistan as well.
(13) For distribution of classes by status of occupation, see
Figure A-8. It would not be wrong to infer from the table that the
expanded middle classes and the privileged class are mainly found among:
paid employees; self-employed in the non-agricultural sector; and
employer with more than ten employees. The last two statuses in this
regard justify the Marxian stance regarding class and relationship with
the means of production.
Durr-e-Nayab <
[email protected]> is Chief of Research,
Demography, at the Pakistan Institute of Development Economics,
Islamabad.
Table 1
Selected Definitions and Methods of Measuring the Middle Class
Rationale/
No. Author Approach Criteria
l. Thurow (1987); Relative Economic/
Birdsall, Graham and Income
Pettinato (2000)
2. Easterly (2001) Relative Economic/
Expenditure
3. Milanovic and Absolute Economic/
Yitzaki (2002) Income
4. Ravallion (2010) Absolute Economic/
Expenditure
5. Birdsall (2010) Absolute Economic/
Income
6. Acs and Loprest Absolute Economic/
(2005) Income
7. Wheary (2005) Absolute Economic/
Income
8. Nehru (2010), Yuan, Absolute Economic/
et al. (2011) Income
9. Banerjee and Duflo Absolute Economic/
(2007) Expenditure
10. Peichl, Shaefer and Relative Economic/
Schneider (2008) Income
11. Brezenski (2010) Relative Economic/
Income
12. McKinsy (2010) Absolute Economic/
Income
13. ADB (2010); Bhandari Absolute Economic/
(2010); Chun (2010) Income
14. Gilbert (2003) Relative Economic/
Income and
Occupation
15. Goldthorpe (1992) Relative/ Economic/
absolute Occupation
No. Definition
l. 75% to 125% of the median
income
2. Expenditure quintiles two to
four
3. Income of PPP $12-$50/day/
person
4. Expenditure of PPP $2-$13/
person/day
5. Income of PPP $ l0/person/day
but not in the top 5%
6. Double the Poverty Line of PPP
$2/person/day
7. Double the national poverty
line
8. Income from PPP $2 to
$20/person/day
9. Expenditure of PPP $2
$10/person/day
10. Double the median income
11. Three times the median income
12. Annual household income
between PPP $13,500 to
$113,000
13. Expenditure from $2 to
$20/person/day
14. Gradation based on income and
nature of occupation
15. Three main clusters-the
service class, the
intermediate class, and the
working class
Source: Found in References.
Note: PPP- Purchasing Power Parity.
(1) See Figure A-1 in the Annex for details.
Table 2
Estimation of the Middle Class in Pakistan by
Various Existing Definitions
Size of Classes by Definition Used (%)
Middle Class
in Number
Proportion (in millions)
Class (%)
Definition One: 75%-125% of
the Median income
Lower 32.8
Middle 29.5 55.2
Upper 37.7
Definition Two: Quintile
approach
Lower 20.0
Middle 60.0 112.2
Upper 20.0
Definition Three: Income of
PPP $12-$50 per person per day
Lower 98.1
Middle 1.8 3.4
Upper 0.1
Definition Four: Expenditure
of PPP $2-$13 per person per
day
Lower 56.1
Middle 42.9 80.2
Upper 1.0
Definition Five: Income of PPP
$10 per person per day but not
in the Top 5%
Lower 97.3
Middle 0.0 0.0
Upper 2.7
Definition Six: Double the
poverty line of PPP $2 per
person per day
Lower 87.3
Middle + 12.7 23.7
Upper
Definition Seven: Double the
national poverty line
Lower 80.7
Middle + 19.3 36.1
Upper
Definition Eight: Income from
PPP $2 to $20 per person per
day
Lower Lower (< $1.25) 30.1
Lower (<$1.25- $2) 28.2
Lower Middle ($2-$4) 28.5
Middle Middle ($4-$10) 10.5 76.7
Upper Middle ($10-$20) 2.0
Upper (>$20) 0.8
Definition Nine: Expenditure
of PPP $2-$10 per person per
day
Lower 56.1
Middle 42.2 78.9
Upper 1.7
Definition Ten: Double the
median income
Below 83.5
Above 16.5 30.9
Definition Eleven: Three times
the median income
Below 92.1
Above 7.9 14.8
Definition Twelve: Annual HH
income between PPP $13,500 to
113,000
Lower 93.9
Middle 6.1 11.4
Upper 0.1
Definition Thirteen:
Expenditure from PPP $2 to $20
per person per day
Lower Lower (< $1.25) 21.3
Lower ($1.25- $2) 34.8
Lower Middle ($2-$4) 32.4
Middle Middle ($4-$10) 9.8 81.3
Upper Middle ($10-$20) 1.3
Upper (>$20) 0.4
Source: Calculations based on PSLM 2007-2008.
Note: (1) Estimation of the approximate size in numbers is based
on using the mid-year population of 187 million in the year 2011.
Following these definitions, the size of the middle class in
Pakistan has shown a growing trend (see A-9) so applying the
2007-2008 estimates to 2011 population can give an
under-estimation/minimum size but not an over-estimation.
(2) Using PPP (Purchasing Power Parity) of US$1= Pak Rs 24.47
in 2008.
Table 3
Estimation of Middle Class through a Weighted Composite Index
Indices
Classes Income Education Housing
Weights applied to each Index (1)
1.050 1.005 0.955
Mean total for each Index (1)
Lower Lower 0.000 0.000 0.267
Middle Lower 0.016 0.014 0.462
Upper Lower 0.329 0.140 0.526
Lower Middle 0.554 0.528 0.496
Middle Middle 0.941 0.564 0.661
Upper Middle 1.050 1.004 0.682
Upper 1.050 1.005 0.870
Total 0.211 0.159 0.417
Indices
Occupation Lifestyle Total
Weights applied to each Index (1)
0.865 1.125 5.000
Mean total for each Index (1)
Lower Lower 0.000 0.186 0.453
Middle Lower 0.336 0.268 1.097
Upper Lower 0.483 0.324 1.802
Lower Middle 0.720 0.364 2.662
Middle Middle 0.683 0.451 3.301
Upper Middle 0.862 0.494 4.092
Upper 0.865 0.802 4.592
Total 0.300 0.275 1.361
Source: Calculated from PSLM 2007-2008.
Note: (1) In order to avoid too many decimals for ease in
comprehension, the weights were multiplied by 5 to form the
composite index score. The weights used for the various indices
as calculated by PCA are: Income 0.210; Education 0.201; Housing
0.191; Occupation 0.173; Lifestyle 0.225; and Total 1.00. The
procedure does not in any way affect the classification of the
sample.
Table 4
Size of Different Classes through a Weighted Composite Index in
Pakistan
Proportion (%)
Class Categorisation for
Middle Class (1) Total Urban Rural
Lower Lower (LLC) Deprived 41.9 23.6 55.2
Middle Lower (MLC) Aspirants 23.0 21.8 23.9
Upper Lower (ULC) Potential Climbers 15.8 20.8 12.3
Lower Middle (LMC) Fledgling middle class 8.5 12.5 5.7
Middle Middle (MMC) Hard-core middle class 4.3 8.1 1.6
Upper Middle (UMC) Elite middle class 6.0 12.3 1.3
Upper (UC) Privileged 0.4 0.9 0.1
Total 100.0 100.0 100.0
Numbers in (Millions) (2)
Class
Total Urban Rural
Lower Lower (LLC) 83.7 20.1 63.6
Middle Lower (MLC) 41.9 16.4 25.6
Upper Lower (ULC) 28.5 15.9 12.6
Lower Middle (LMC) 16.3 9.4 6.8
Middle Middle (MMC) 6.7 5.2 1.5
Upper Middle (UMC) 9.5 8.0 1.5
Upper (UC) 0.6 0.6 0.0
Total 187.2 75.6 111.6
Source: Calculated from PSLM 2007-2008.
Note: (1) Categories adapted from Sridharan (2004) and Tharoor (2010).
(2) For the method employed to calculate these numbers see A-5.
* Signifies value less than 0.1.
Table 5
Size of the Middle Class in Pakistan Using a Weighted
Composite Index
Proportion (%)
Total Urban Rural
Strict Middle Class
(LMC + MMC + UMC) 18.8 32.9 8.6
Expanded Middle Class (1)
(LMC + MMC+ UMC + ULC) 34.6 53.7 20.9
Broadest Middle Class (1)
(ULC + LMC + MMC + UMC + UC) 35.0 54.6 21.0
Numbers (in Millions) (2)
Total Urban Rural
Strict Middle Class
(LMC + MMC + UMC) 32.5 22.6 9.8
Expanded Middle Class (1)
(LMC + MMC+ UMC + ULC) 61.0 38.5 22.4
Broadest Middle Class (1)
(ULC + LMC + MMC + UMC + UC) 61.6 39.1 22.4
Source: Calculated from PSLM 2007-2008.
Note: (1) BAs categorised by Sridharan (2004).
(2) For the method employed to calculate these numbers
see A-5.
Table 6
Regional and Provincial Classes Estimated by the Weighted Composite
Index
%
Punjab Sindh
Class Total Urban Rural Total Urban Rural
Lower Lower 38.6 21.2 51.6 45.0 24.7 64.3
Middle Lower 23.7 22.4 24.7 18.4 18.4 18.2
Upper Lower 17.1 20.6 14.5 14.2 20.6 8.1
Lower Middle 8.4 12.6 5.3 9.7 12.3 7.2
Middle Middle 4.9 8.9 1.8 5.3 9.3 1.4
Upper Middle 6.5 12.8 1.9 7.2 14.1 0.6
Upper 0.7 1.4 0.1 0.3 0.6 0.1
Total 100.0 100.0 100.0 100.0 100.0 100.0
Size of Middle Class (1)
36.9 54.9 23.5 36.4 56.3 17.1
%
Khyber Pakhtunkhwa Baluchistan
Class Total Urban Rural Total Urban Rural
Lower Lower 41.4 26.4 50.3 47.8 26.1 59.9
Middle Lower 26.5 24.3 27.9 23.3 23.2 23.4
Upper Lower 15.3 20.4 12.2 15.3 22.1 11.5
Lower Middle 8.6 12.2 6.5 6.8 12.6 3.6
Middle Middle 3.0 5.5 1.4 3.0 6.2 1.2
Upper Middle 4.9 10.6 1.6 3.6 9.4 0.4
Upper 0.2 0.6 0.1 0.1 0.4 0.0
Total 100.0 100.0 100.0 100.0 100.0 100.0
(%)
31.8 48.7 21.7 28.7 50.3 16.7
Source: Calculated from PSLM 2007-2008.
Note: (1) Based on the 'Expanded Middle Class'.
Table 7
Occupational Distribution within Classes by Weighted Composite
Index (1) (%)
Classes through Weighted Index
Lower Middle Upper Lower
Occupation Lower Lower Lower Middle
Armed Forces 0.0 0.8 0.7 1.1
Legislators, Senior Officials and
Managers 0.0 0.3 0.9 2.9
Professionals 0.0 2.9 4.6 18.3
Technicians and Associate
Professionals 0.0 7.0 10.0 19.3
Clerks 0.0 3.6 7.6 14.5
Service Workers and Shop/
Market Sales Workers 0.0 31.0 34.1 30.0
Agriculture and Fishery Workers 33.2 17.0 14.9 5.9
Crafts and Related Trade Workers 9.0 8.5 8.5 2.6
Plant and Machine Operators and
Assemblers 11.9 9.2 7.1 2.1
Elementary Occupations 45.9 19.6 11.7 3.3
Total 100.0 100.0 100.0 100.0
Classes through
Weighted Index
Middle Upper Upper
Occupation Middle Middle
Armed Forces 0.6 1.3 3.2
Legislators, Senior Officials and
Managers 8.2 20.7 30.6
Professionals 15.7 26.4 37.1
Technicians and Associate
Professionals 14.2 21.3 9.7
Clerks 11.8 12.9 1.6
Service Workers and Shop/
Market Sales Workers 28.9 17.1 17.7
Agriculture and Fishery Workers 8.6 0.1 0.0
Crafts and Related Trade Workers 5.0 0.0 0.0
Plant and Machine Operators and
Assemblers 3.1 0.0 0.0
Elementary Occupations 3.9 0.0 0.0
Total 100.0 100.0 100.0
Source: Calculated from PSLM 2007-2008.
Note: (1) Based on the selection criteria made for the occupation
sub-index of the composite weighted index.
Table 8
Industrial Distribution within Classes (1)
Classes through
Weighted Index
Lower Middle Upper
Sectors Lower Lower Lower
Agriculture, Forestry, Hunting and Fishing 42.9 19.4 15.5
Mining and Quarrying 0.8 0.5 0.0
Manufacturing 9.3 8.8 9.3
Electricity, Gas and Water 0.6 1.5 2.4
Construction 19.1 8.3 5.1
Wholesale and Retail Trade, and 4.5 24.5 29.4
Hotel/Restaurants
Transport, Storage and Communication 12.0 9.1 6.9
Financing, Insurance, Real Estate and 0.2 0.8 2.1
Business Services
Community, Social and Personal Services 10.5 27.1 29.1
Total 100.0 100.0 100.0
Classes through
Weighted Index
Lower Middle Upper
Sectors Middle Middle Middle
Agriculture, Forestry, Hunting and Fishing 6.2 8.9 1.4
Mining and Quarrying 0.8 0.5 0.9
Manufacturing 7.6 9.7 11.6
Electricity, Gas and Water 2.6 2.6 2.7
Construction 2.5 2.7 2.1
Wholesale and Retail Trade, and 25.6 27.0 15.5
Hotel/Restaurants
Transport, Storage and Communication 4.3 4.8 4.9
Financing, Insurance, Real Estate and 3.6 6.9 9.4
Business Services
Community, Social and Personal Services 46.8 36.8 51.5
Total 100.0 100.0 100.0
Classes through
Weighted Index
Upper
Sectors
Agriculture, Forestry, Hunting and Fishing 1.6
Mining and Quarrying 1.6
Manufacturing 12.9
Electricity, Gas and Water 1.6
Construction 1.6
Wholesale and Retail Trade, and 22.6
Hotel/Restaurants
Transport, Storage and Communication 1.6
Financing, Insurance, Real Estate and 14.5
Business Services
Community, Social and Personal Services 41.9
Total 100.0
Source: Calculated from PSLM 2007-2008.
Note. (1) Based on the selection criteria made for the occupation
sub-index of the composite weighted index.
Table 9
Status of Occupation within Classes (1)
Classes estimated by Composite
Weighted Index
Lower Middle Upper Lower
Status of Occultation Lower Lower Lower Middle
Employer with < 10 Employees 0.2 0.4 0.7 1.1
Employer with > 10 Employees 0.1 0.2 0.2 1.4
Self-employed Non-agriculture 8.7 25.8 28.8 27.5
Paid Employee 59.8 57.6 56.0 64.5
Unpaid Family Worker 0.1 0.1 0.0 0.0
Own Cultivator 18.1 11.9 12.0 4.7
Share Cropper 6.7 1.3 0.4 0.3
Contract Cultivator 2.7 0.8 1.0 0.3
Own Livestock 3.7 1.9 0.9 0.3
Total 100.0 100.0 100.0 100.0
Classes estimated by
Composite Weighted Index
Middle Upper Upper
Status of Occultation Middle Middle
Employer with < 10 Employees 1.6 1.0 0.0
Employer with > 10 Employees 3.9 4.0 3.2
Self-employed Non-agriculture 27.0 16.9 22.6
Paid Employee 60.1 78.0 74.2
Unpaid Family Worker 0.0 0.0 0.0
Own Cultivator 6.3 0.1 0.0
Share Cropper 0.0 0.0 0.0
Contract Cultivator 0.6 0.0 0.0
Own Livestock 0.5 0.0 0.0
Total 100.0 100.0 100.0
Source: Calculated from PSLM 2007-2008.
Note: (1) Based on the selection criteria made for the occupation
sub-index of the composite weighted index.
Fig. 1. Comparison of the Size of the Classes as Estimated by the
Weighted Composite Index and the Prevailing Measure (1)
Prevailing Measure Composite Weighted
Index
UC 0.4 0.4
UMC 1.3 6.0
MMC 9.8 4.4
LMC 32.4 8.5
ULC 34.8 15.8
LLC & MLC 21.3 64.9
Source: Calculated from PSLM 2007-2008.
Note:
(1) Definition Thirteen in Table 2.
(2) Classes: Lower lower (LLC), Middle lower (MLC),
Upper lower (ULC), Lower middle (LMC), Middle
middle (MMC), Upper middle (UMC), Upper (UC).
Note: Table made from bar graph.
Figure 2: Nature of Occupation and Level of Education by
Classes through the Weighted Composite Index and the Prevailing
Definition (2)
A. Presence of College Graduate in the Household
(i) Existing Definition
No Has
Graduate Graduate
LC 95 5
LMC 79 21
MMC 49 51
UMC 32 68
UC 31 69
(ii) Weighted Composite Index
No Has
Graduate Graduate
LLC 100
MLC 99 1
ULC 86 14
LMC 47 53
MMC 44 56
UMC 100
UC 100
B. Nature of Occupation
(i) Existing Definition
Non
Manual Manual
LC 77 23
LMC 56 44
MMC 37 63
UMC 75 75
UC 24 76
(ii) Weighted Composite Index
Non
Manual Manual
LLC 100
MLC 61 39
ULC 44 56
LMC 17 83
MMC 21 79
UMC 100
UC 100
Source: Calculated from PSLM 2007-2008.
Note:
(1) Classes: Lower lower (LLC), Middle lower (MLC),
Upper lower (ULC), Lower middle (LMC), Middle
middle (MMC), Upper middle (UMC), Upper (UC).
(2) Definition Thirteen in Table 2.
Note: Table made from bar graph.
