Brazil's middle class starts to lose ground

Ten years ago, Brazilian musician Max Gonzaga shot to fame with "Middle Class", a hit song about the millions of Brazilians who were emerging from poverty to join the middle class, often referred to in Brazil as "C Class".

"I hate buses. I have a car that I bought in instalments . . . I'm always at the limit of my overdraft," say the lyrics, capturing some of the cynicism many wealthier Brazilians felt about the consumerism that had gripped the country.

Since Brazil's ruling Workers' Party (PT) took power in 2003, more than 40m Brazilians have joined the middle class, thanks to government benefit schemes such as Bolsa Familia and an economic boom that boosted wages and brought more stable employment.

Greater financial inclusion and the expansion of Brazil's credit markets also meant that, for the first time, many of these families could buy the trappings of a middle-class lifestyle in affordable monthly instalments.

Brazil's Secretariat of Strategic Affairs last defined "middle class" in 2012 as anyone living in a household with per capita income of R$291-R$1,019 ($99-$347) per month, although definitions vary slightly across the country's institutions.

The exodus of millions of Brazilians from poverty has brought profound political and economic changes, winning the PT a loyal base of voter support that has helped keep the party in power ever since, while attracting foreign investors and driving economic growth.

However, Brazil's new C Class is now at a crossroads. Over the past couple of years, many have become frustrated with the limitations of their new status - aside from washing machines, they want better education, hospitals and other public services.

In June 2013 more than a million protesters took to Brazil's streets. But as Latin America's biggest economy faces its worst recession in a quarter of a century this year, the concerns of the new middle class are even bigger, says Mauro Paulino, director-general of Datafolha, the polling company, which has tracked the protests.

"At that moment [during the 2013 protests] there was a feeling that this process of social ascension had come to a halt, but now they are actually afraid of losing everything they have achieved - of going backwards," he says.

Signs of this "middle-class reversal" are already apparent. Last November, Ipea, the government think-tank, said the number of Brazilians in extreme poverty had risen in 2013 for the first time since 2003. Brazil's C Class is also no longer the driver of consumption in the country, according to Nielsen, an information and data provider. The wealthier Classes A and B - 33 per cent of Brazil's population - account for 60 per cent of spending growth in Brazil, while Class C - 53 per cent of the population - only accounts for 33 per cent, Nielsen said in a study released in March. In 2009, C-Class Brazilians accounted for 60 per cent of the country's spending growth, Nielsen said.

While the government's recent efforts to improve the country's fiscal accounts and attract investment promise to help put the economy back on track, uncertainty remains over the long-term future of the C Class and, in turn, Brazil's own social and economic development.

The biggest concern among Brazil's new middle class, says Mr Paulino, is rising unemployment, especially among the young, followed by inflation.

"When families go to the supermarket they can't fill up their trolleys like they used to with the same amount of money, and when they . . . turn on the TV the news is all about corruption," says Mr Paulino. "They're short of money and at the same time they are being told they have been robbed."

. . .

Two families, one city, different lives

Two people in Sao Paulo recall their achievements over the past decade and reveal their apprehension about the future, writes Aline Rocha.

Francisco de Lima

"The reason I came to Sao Paulo is the same for anyone who was born in the northeast and left: to look for a better way of life," says Francisco de Lima, who lives in Heliopolis, one of Sao Paulo's biggest slums or "favelas". When he was 14 years old, he left his family and his small home town in the poorer northeastern state of Pernambuco to move to Sao Paulo. After working in supermarkets and restaurants, Chico, as the 37-year-old is known in Heliopolis, decided to start his own business and now owns a bar and a pizzeria in the favela. Along with his wife Sandra and their 11-year-old son Caio, Mr de Lima is typical of a new middle class that has transformed Brazil over the past decade.

Mr de Lima says his family has a better lifestyle than 10 years ago - a result not only of his hard work, he says, but also of government investments and the greater availability of credit since the early 2000s. "During the first years of the Workers' Party (PT) government, life improved for Brazilians," he says, referring to the period that followed Luiz Inacio Lula da Silva's election as president in 2002. "I travel a lot to Pernambuco and I can see the evolution there," he says.

However, while Mr de Lima may be thankful for what the ruling PT party has done for his family, he is also one of the millions of Brazilians who has protested against President Dilma Rousseff and the vast corruption scandal engulfing her government.

As for life at the moment, he has few complaints. His son Caio studies in a government-funded school, but there are plans to move him to a private one next year. The family still live in the favela, but as Mr de Lima points out, this is not because he could not buy a house in a better neighbourhood, but because he wants to live next to his business and the people who helped him to have the better lifestyle he has today.

However, supplies for the restaurant and the bar are getting more expensive by the day, he says, and he fears it may not be a good year to invest in the future. "I think economic growth will either be stable or decrease," he says. "I'm going to wait to see what happens."

Marcia Del Paggio

When asked about her family's future plans, Marcia Del Paggio says she only has one wish: to leave Brazil. "We only work to pay taxes here, it's very difficult," explains the 37-year-old. Ms Del Paggio owns a small real estate company with her husband, Torquato, and lives in Higienopolis, a central and affluent neighbourhood in Sao Paulo, with their two daughters.

The family moved there only two years ago after gradually increasing their wealth. "We were able to buy our house, a car . . . We're improving, always working a lot to have these things," she says. But the future seems uncertain. Even though the family has not yet had to cut back on anything, Ms Del Paggio says she has noticed food prices getting higher and business slowing. "The sales, locations, everything has decreased. People are holding off making investments and we're worried", she says, adding that the situation will probably get worse over the next few months.

The reason for her pessimism is what she perceives as economic and political instability, which has led to protests around the country. Even though the family did not go to the demonstrations in Sao Paulo, Ms Del Paggio and her husband support calls for Dilma Rousseff's impeachment. "But I'm optimistic in a way because the media is making people wake up," she says. "It's not the same as before, when corruption was swept under the carpet".

However, the property broker also says that they do not have too much to complain about when it comes to family life. Their daughters, Stella, 14, and Laura, 9, study at one of the biggest private schools in the city, Colegio Mackenzie. The girls have had additional private English lessons too, a common practice among middle and upper-class families in Brazil. The family employs someone to clean the house and look after the girls while Ms Del Paggio and her husband are working.

The couple say they are considering sending their oldest daughter abroad on an exchange programme. Stella is excited about the idea: "It's one of my dreams," she says.

The family has a big trip planned for July, when children in Brazil have one month of vacation from school. The four of them are going on holiday to Europe. "My husband thinks it's important for the girls to understand life in other countries," Ms Del Paggio explains.

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