Pakistan's middle class has been growing at four times the rate of population growth over the past 20 years

[Falcon26]

How big is the Pakistani middle class?

September 19, 2020

At nearly 548,000 square feet of leasable space, Dolmen Mall in Clifton, Karachi is one of the biggest in the country, and – given its location in the country’s economic capital, yet located in the one corner of one of the city’s most elitist neighbourhood (Clifton) that is the farthest from any working class dwelling – it may quite possibly be one of the most exclusive places in the country.

Entry is technically free, but it is not quite as simple as not needing any money to get in. There are guards at the door, whose job is less about security and more about keeping people out who do not ‘seem to belong’ there. Sure, the mall can claim that 10 million people visited in 2019, but that is not 10 million unique individuals: that is 10 million unique person trips. If you went there 20 times, that counts at 20 towards that 10 million, even though you are one individual.

There is a place in the food court on the upper floors of the mall from where you can see almost every single person entering the vast mall. And while it does attract people from varying socio-economic backgrounds, there is – almost every week – at least one, and usually more, families who are clearly there for the first time, dressed in some of the best clothes (pressed and clean, but perhaps slightly old-fashioned), for whom the outing represents much more than just a shopping trip. It is a small, but significant step that they are taking in showing themselves as much as the rest of the world that they have arrived: that they belong there, along with all of the other economically comfortable people there, even though some of those wealthier customers will spend in one shopping trip what this family earns in a month.

By global, or even regional standards, Pakistan’s most upscale malls are far from the swankiest. Most of the brands you find there are part of ordinary middle-class high streets in major cities in Europe or North America. But for that family, to be able to be around even this level of consumption represents the first time they have been able to put their head above water: to have just a little more money than subsistence living. For the first time, perhaps ever in their lives, after having paid for food, housing, utilities, school fees, and other essentials, there is a little bit – just a little bit – left over for them to think about purchasing something just because they want to, and not because they need it.

The point of talking about families like this is not to exoticise them, but to point out the following fact: the cautious way they go up the elevators to the upper floors of the mall mirrors in physical form the process they metaphorically undertook to get there: a place in the Pakistani middle class is highly precarious, the amount of time any family can be there is highly variable, and their fall from grace can be sudden, swift, and completely not their fault.

It is easy in the abstract to talk about how the government of Pakistan’s decisions on matters of economic policy can have an impact on individuals and households throughout the country. It is a rude awakening to see the numbers in how that translates onto the incomes of individuals and how it sharply vary from year to year, depending on how well or badly the economy is doing.

For this article, Profit undertook an analysis in collaboration with Elphinstone, a financial services company (disclosure: the author of this article is the founder of Elphinstone), in order to analyse data on Pakistan’s income distribution, average incomes, and the rate of growth in incomes over the past two decades utilising data from a variety of different data sets compiled by the Pakistan Bureau of Statistics. We included a note on our methodology for those who may be interested in learning about this, but feel free to skip over the next section if you just want to dive straight into the results of the analysis

 

[PAKISTANFOREVER]

How big is the Pakistani middle class?

September 19, 2020

At nearly 548,000 square feet of leasable space, Dolmen Mall in Clifton, Karachi is one of the biggest in the country, and – given its location in the country’s economic capital, yet located in the one corner of one of the city’s most elitist neighbourhood (Clifton) that is the farthest from any working class dwelling – it may quite possibly be one of the most exclusive places in the country.

Entry is technically free, but it is not quite as simple as not needing any money to get in. There are guards at the door, whose job is less about security and more about keeping people out who do not ‘seem to belong’ there. Sure, the mall can claim that 10 million people visited in 2019, but that is not 10 million unique individuals: that is 10 million unique person trips. If you went there 20 times, that counts at 20 towards that 10 million, even though you are one individual.

There is a place in the food court on the upper floors of the mall from where you can see almost every single person entering the vast mall. And while it does attract people from varying socio-economic backgrounds, there is – almost every week – at least one, and usually more, families who are clearly there for the first time, dressed in some of the best clothes (pressed and clean, but perhaps slightly old-fashioned), for whom the outing represents much more than just a shopping trip. It is a small, but significant step that they are taking in showing themselves as much as the rest of the world that they have arrived: that they belong there, along with all of the other economically comfortable people there, even though some of those wealthier customers will spend in one shopping trip what this family earns in a month.

By global, or even regional standards, Pakistan’s most upscale malls are far from the swankiest. Most of the brands you find there are part of ordinary middle-class high streets in major cities in Europe or North America. But for that family, to be able to be around even this level of consumption represents the first time they have been able to put their head above water: to have just a little more money than subsistence living. For the first time, perhaps ever in their lives, after having paid for food, housing, utilities, school fees, and other essentials, there is a little bit – just a little bit – left over for them to think about purchasing something just because they want to, and not because they need it.

The point of talking about families like this is not to exoticise them, but to point out the following fact: the cautious way they go up the elevators to the upper floors of the mall mirrors in physical form the process they metaphorically undertook to get there: a place in the Pakistani middle class is highly precarious, the amount of time any family can be there is highly variable, and their fall from grace can be sudden, swift, and completely not their fault.

It is easy in the abstract to talk about how the government of Pakistan’s decisions on matters of economic policy can have an impact on individuals and households throughout the country. It is a rude awakening to see the numbers in how that translates onto the incomes of individuals and how it sharply vary from year to year, depending on how well or badly the economy is doing.

For this article, Profit undertook an analysis in collaboration with Elphinstone, a financial services company (disclosure: the author of this article is the founder of Elphinstone), in order to analyse data on Pakistan’s income distribution, average incomes, and the rate of growth in incomes over the past two decades utilising data from a variety of different data sets compiled by the Pakistan Bureau of Statistics. We included a note on our methodology for those who may be interested in learning about this, but feel free to skip over the next section if you just want to dive straight into the results of the analysis

The living standard of the Pakistani people has been getting better and they are becoming more better off but the Pakistani government has been getting more poorer in that time too.

 

[Falcon26]

The living standard of the Pakistani people has been getting better and they are becoming more better off but the Pakistani government has been getting more poorer in that time too.

Blame it on a tax evasion culture that starts at the top and trickles down at every level. An undocumented economy poses a bigger threat than an enemy ever could. Pakistan must document its economy and reform its taxation system.