Mahfi Eğilmez's 'middle class' assessment: 'It is gradually disappearing'

Mahfi Eğilmez shared his assessment with T24 after the Turkish Statistical Institute (TÜİK) released the 2023 Income and Living Conditions Survey data.

Mahfi Eğilmez wrote the following in his article:

"In my article published on this blog on May 6, 2023, I addressed the income distribution data for 2021, mentioned that income distribution was rapidly deteriorating, and concluded my article by saying, 'Considering that inflation reached 64.27 percent at the end of 2022, we can say that the real deterioration will emerge when the 2022 data is announced.'

TÜİK has announced the results of the 2023 Income and Living Conditions Survey, which calculates income distribution statistics based on the previous calendar year, 2022. I present these results in the tables below in comparison with the 2021 results (prepared by me based on data from the TÜİK Income Distribution Statistics 2023 and 2022 News Bulletins and TÜİK GDP and Population data):

There are two measures we use to gauge the equality/inequality of personal income distribution: The first is the Gini Coefficient, which ranges between zero and one, where approaching zero indicates increased equality and approaching one indicates increased inequality. According to the tables, the Gini Coefficient, which was 0.415 in 2021, has risen to 0.433 in 2022. Accordingly, income distribution deteriorated further in 2022 compared to 2021. The second is the P80/P20 Ratio, which shows the difference between the income obtained by the 20 percent of the population receiving the highest share of income and the 20 percent receiving the lowest share. The P80/P20 Ratio rose even further in 2022 compared to 2021 (the difference increased from 8 times to 8.44 times); in other words, the gap between those with the highest income and those with the lowest income appears to have widened.

The last column of the table above is reserved for comparing the two years. While there were increases in the incomes of all income groups in 2022 compared to 2021, the largest increase appears to have occurred in the highest-income group (15.7 percent).

To take a closer look at how GDP is shared, we need to look at the table below (Source: TÜİK Income Distribution Statistics 2023 News Bulletin):

Accordingly, while the top 20 percent of the population receiving the highest income takes 49.7 percent of the country's total income (GDP), the remaining population (80 percent of the total population) receives 50.3 percent of the total income. This distribution is also deteriorating year by year, and the wealthiest segment is becoming increasingly richer.

The most fundamental reason for this deterioration in income distribution is the interest rate reduction policy that began in September 2021 and continued until the middle of 2023. The massive spike in inflation caused by this policy has disrupted income distribution. We estimate that the deterioration continued in 2023 as well. This serious deterioration in income distribution coincides with the phenomenon of the middle class, which we observe around us, gradually disappearing. The fact that the income of the second and third 20 percent income groups, which can be considered the middle class, saw increases well below the average confirms this observation of ours."