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Feb 11, 2016 2:45 EDT

Rise of middle class undermined in East Europe & Central Asia

iCrowdNewswire - Feb 11, 2016

Rise of middle class undermined in East Europe & Central Asia


UNITED NATIONS, Feb 11 2016 (IPS) – The UN’s post-2015 development agenda, which was adopted by world leaders at a summit meeting last September, includes a highly ambitious goal: the eradication of extreme poverty by the year 2030.

The decline in poverty, as reflected in the UN’s Millennium Development Goals (MDGs) which ended last December, had one positive fallout: the rise of a new middle class graduating largely from the ranks of the poor.

But a new study by the UN Development Programme (UNDP) points out that the decline in poverty and the rise of the middle class are being undermined by several factors, including falling commodity prices and shrinking remittances – specifically in Eastern Europe and Central Asia.

The middle class in the countries of Eastern Europe and Central Asia swelled from about 33 million people in 2001 to 90 million in 2013, according to the latest available figures.

“In many ways, the story in this region is different from what is happening in other parts of the world. The share of people living on $10 and $50 dollars per day has actually increased in most of these countries”,(as against a poverty line of less than 1.25 dollar a day), said Cihan Sultanoğlu, the Director of UNDP’s Regional Bureau for Europe and the Commonwealth of Independent States.

Over that same period, the number of people in the region living in poverty fell from at least 46 million in 2001 to about 5.0 million in 2013.

“But the region’s advances are under threat and the focus needs to be on improving its prospects for sustainable development”, she added.

With collapsing commodity prices, shrinking remittances and slow economic growth in Europe, the Russian Federation and much of the rest of the region, income-and-employment generating opportunities are disappearing, she said.

Sultanoglu told IPS: “The question really is: what impact inequality can have in reducing poverty. In this region, low or falling inequalities are central to prospects for poverty reduction, inclusive growth, and sustainable development.”

Addressing the UN Commission for Social Development (CSD) early this week, Secretary-General Ban Ki-moon said: “Experience has shown that thriving economy is not enough to eradicate poverty and promote shared prosperity. Economies must be put at the service of people, through effective integrated social policies.”

“The widening gap between the rich and poor is marginalizing and alienating the most vulnerable in society,” he warned.

Ben Slay, Chief Economist, UNDP Eastern Europe and Central Asia, told IPS: “The middle class is unlikely to grow much in 2016 or 2017 because of the difficult overall growth environment.”

The UNDP study points out that the share of workers in vulnerable employment in Albania, Azerbaijan, Georgia, the Kyrgyz Republic, and Tajikistan is already estimated at close to 50 percent, while many different groups are excluded.

Vinicius Pinheiro, Director of the UN Office of the International Labour Organization (ILO) told the CSD Monday that the number of unemployed people had increased in 2015 by more than 0.7 million, reaching 197.1 million globally: a one million increase over 2014 and more than 27 million before the pre-crisis levels.

According to UNDP, inequalities and exclusion are at the heart of the newly-inaugurated Sustainable Development Goals (SDGs).

And the UN’s 193 member states have committed themselves to eradicating poverty, fighting inequalities, building peaceful, inclusive, and resilient societies, and securing the future of the planet and the well-being of future generations.

Almost 1.5 billion people live in poverty according to UNDP’s Multidimensional Poverty Index, and almost 800 million are vulnerable to slipping back into poverty. Eighty per cent of the world’s elderly lack basic social protection, making them a particularly vulnerable group.

“The challenge is not just to lift people out of poverty – it is to ensure that their escape is permanent,” says UNDP Administrator Helen Clark.

That is difficult, if there is no social protection, and where societies are vulnerable to relapses into conflict and to huge setbacks from natural disasters, she added.

“As dynamic emerging economies and stable societies move ahead, increasingly we will see extreme poverty co-located with zones of conflict and high disaster risk exposure, and where there is poor governance and little rule of law.”

It will therefore be idle rhetoric to talk about poverty eradication, said Clark, if the context in which it exists isn’t addressed.

“At UNDP, we look forward to the post-2015 global agenda taking on this challenges. We equally look forward to playing our full part in building the more inclusive, peaceful, and resilient societies which can advance human development.”

The battle against poverty is also being thwarted by military conflicts and the growing humanitarian crises.

The secretary-general told the CSD: “We are living in a world of turmoil and trouble.” He said there may be fewer wars between countries, but there is more insecurity.

“Inequality remains too high, affecting poverty reduction efforts and social cohesion in both developed and developing countries.”

He said too many people continue to face exclusion and are unable to realize their full potential. Too few economies have attained inclusive and sustainable growth and are unable to promote true social progress.

“People are frustrated. They are working harder and falling behind. Too often, instead of decisions, they see deadlock. And they wonder: are leaders even listening?”, Ban asked.

The writer can be contacted at [email protected]

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Thalif Deen

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