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A Middle Class Moment in Chile
A Middle Class Moment in Chile Stamp
November 11, 2011
A Postcard from the Americas
A Middle Class Moment in Chile

University of Chile

Middle class discontent, which swept the Middle East this year, has made its presence felt in Chile, where thousands of students staged street protests against the country’s profits-based higher education system.

Until recently, Chile been in the news for all the right reasons. The Latin American powerhouse has enjoyed spectacular economic growth over the course of the last two decades since the dictatorship of Augusto Pinochet ended in 1990. Data also attest to the dramatic rise in personal income, climbing from just above $2,000 to $14,000 currently. The commodities boom has enriched the nation and has spurred Chilean companies to invest more than $50 billion in other South American economies.

So what makes Chilean students a disgruntled lot? Truth be told, vast sections of the population still lack the wherewithal to afford expensive higher education, an advantage that can make a difference in a young life, as well as for a nation.

In fact, the protests echo a wider discontent in other emerging economies such as India, where the middle class is demanding more from their governments and institutions. Running parallel to Chile’s economic progress over the years has been the four-fold increase in the number of students opting for higher education. And it goes without saying that a better-educated workforce is a must if Chile is to become the first developed country in Latin America by 2018 as envisioned by President Sebastian Pinera.

Chile’s education system, right from primary school to the university level, is actually rated among the best in the region. However, the sector receives scant public funding and doesn’t have an organized system of subsidized education loans or student grants. Moreover, the country’s higher education sector is mostly privatized, with about 40% of the costs borne by households, the highest rate among the OECD club of rich countries, as an Economist article points out. Specifically, one third of secondary schools, as well as technical and vocational colleges attended by the majority of students opting for higher education, are profit-making institutions, the report says. As a result, the richest go to the best universities, while the poor end up in institutions that don’t offer quality education, as teachers are underpaid and infrastructure is often poor. Officially, private universities in Chile are not allowed to make profits. However, they have managed to bypass the regulation by christening themselves as “property companies that have leased out their premises to the universities,” as The Economist puts it. The protesting students are right to point out that education is a public service, though the businessman-turned President Pinera seems to hold the view that complete state-funding would mean subsiding the rich.

Still, there seems to be more to the mostly middle-class protests than meet the eye. Despite the country’s economic progress, income distribution has been uneven. Many feel that only the crème de la crème of the society are allowed to enjoy the riches and privileges ushered in by the country’s scorching growth. Many families and students are forced to take on massive debt to fund higher education. The end result is that many students graduate with a mound of bills, which will take them years to repay.

President Pinera, whose popularity ratings have nosedived, has been quick to realize the gravity of the situation. Recently, he announced the budget for next year, which envisions a 5% hike in public spending to over $60 billion with special focus on education, according to a Reuters news report. The bill, which proposes to allocate $11.7 billion for spending on education, also has a provision to create a $4-billion education fund, which the president has touted as the biggest education budget ever in Chile’s history. Pinera’s decision didn’t come as a surprise as the domestic economy, which was seen growing at the rate of 6.5% this year, is now forecasted to clock only 4.7% in the second half of the year.

The university students may not have much to lose and a whole new world to win if they succeed. More importantly perhaps, the protests have taught the Pinera administration a thing or two about the growing clout of the country’s middle class. An education system that is funded entirely by tax payers may not be financially viable, yet the government would do well to realize that it will be in the best interests of the country to keep the students where they belong: in the classroom.

 

Image Credit: Ricardo Hurtubia under Creative Commons license

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