Coronavirus transforms the middle classes of the South American nation into new poor


People visit a popular market in Santiago amid the coronavirus pandemic.

Santiago, Chile:

During more than three decades of boom in Chile, the middle classes reaped the benefits, but barely three months of the coronavirus pandemic have already reduced many people to poverty.

When a protest took to the streets against inequality in October, it was largely led by the middle classes.

The protests lasted for months, affecting many small businesses – and just as they began to recover, the coronavirus struck in mid-March.

With high debt levels, facilitated by easy access to credit and a lack of state support, large numbers of the middle class have been left in a vulnerable position by the virus crisis.

“The richest 10% is the only sector relative to bulletproof in Chile,” said Dante Contreras, deputy director of the Center for Studies on Social Conflict and Cohesion (COES).

Contreras is also a professor at the University of Chile, which has calculated that poverty has gone from 9 to 15%.

An emergency family fund has been created to help people cope with the health crisis, but it only covers households that report less than 400,000 pesos ($ 490) per month.

This represents only 34% of Chilean households, which means that the entire middle class – which represents almost half of the 18 million inhabitants of Chile – receives nothing.

“What you see in Chile is a big fluctuation in household income. Families coming out of poverty and families coming back out of poverty. And it’s a snapshot of the high level of fragility that makes them difficult to make long-term decisions, “said Contrerasa.

“Live or pay rent”

Pablo Martinez is a prime example. In just over a year, the 44-year-old has grown from a prosperous and solvent engineer living in an upper-middle-class neighborhood to barely enough to live on.

Since he was laid off in March 2019, he has been unable to find a job.

In the first months, he ran out of savings and unemployment insurance.

He started working as a driver for Uber, but the work slowed down when the protests broke out in October and dried up completely when the virus lockdown started.

“If before we were critical, now we are practically paralyzed,” Martinez told AFP.

Whereas before he “lived relatively comfortably”, he can no longer afford to pay the rent.

“There is living or paying the rent, I can’t do both.”

He and his wife have opened a boutique selling personalized gifts, while he also teaches guitar and piano lessons online.

But it is not enough and he is not entitled to state aid.

The surveyor Rodrigo Acevedo, 44, is in the same situation.

After the suspension of his employment, he had to rely on the employment protection law that had been created during the pandemic for employees to have access to their unemployment insurance.

The first monthly payment was worth 70% of their salary, but it gradually decreased.

His monthly salary of $ 1,200 meant that he was not eligible for state aid, and he had to withdraw his daughter from a private college and enroll her in a public school.

“We had no other choice,” he told AFP.

In Chile, there is a great disparity in the level of public and private education and health care.

“A radical change”

Since 1990, Chile has significantly reduced poverty by 40 to 9 percent, but the middle classes have improved their lifestyles through credit.

Today, 70% of these families live with an unsustainable level of debt.

A study by the University of Chile found that the self-employed were the most affected by the pandemic, with their wages falling by 60%.

“The drop in the level of well-being of the middle class is going to be significant,” said Contreras. “Even if they do not fall into poverty, it will be a radical change: moving from the private health care system to the public health care system, schools for children or liquidating assets.”

Life has already changed for Pedro Castro, 54, a successful businessman whose business has been hit by the pandemic.

To make ends meet, he rented his comfortable home in the capital’s trendy Nunoa district and moved his family to a cabin on the outskirts of Santiago.

“We still have to go out on the street,” Castro, who now sells purified water, told AFP. “Living cards, savings, selling machines to make money and payments.”

(With the exception of the title, this story was not edited by GalacticGaming staff and is published from a syndicated feed.)


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