Just a few years ago, it was easy to feel people’s confidence in the future in coffee shops, real estate markets, and shopping malls. Someone opened their own business, someone took out a car loan, planned a vacation abroad or saved up for their children’s education. It was the same conditional middle class, which is considered neither rich nor poor. People who kept the economy on their side, supported local businesses and believed that the effort was worth the result. Today, this confidence has been shaken – the middle class in Ukraine is shrinking like a blanket that is being pulled from all sides, and there is less and less space in it.
Between perception and reality: who is considered middle class in Ukraine
Today, more than 40% of people in Ukraine consider themselves to be representatives of the middle class, but if you look not at self-perception, but at real incomes, the picture is completely different. By in words People’s Deputy Andrii Nikolayenko, only less than 7% of Ukrainians during the war really met the criteria of the middle class. An even more significant figure, which is less than 1.5% of the population, belongs to the wealthy stratum. The rest (more than 90%) was formed by those who actually found themselves below the limit of average prosperity. And although many of them still cling to their usual way of life or do not want to accept changes, the financial reality says otherwise: the majority of Ukrainians today live in conditions of limited opportunities and constant economic instability. Such statistics confirm the shift in the social structure of the country, which is clearly felt in everyday life.
In Ukraine, the concept of “middle class” remains unclear, because there are no specific criteria by which its boundaries could be clearly defined. In general, the concept of middle class varies depending on the country. In the US, it usually refers to those who can afford expenses beyond basic needs, such as food, clothing, or rent. It is about the opportunity to buy a car, household appliances, and sometimes own housing. In European countries, the criteria are similar. People with low incomes there include those who cannot afford the necessary household appliances, cannot afford an annual vacation, or have no savings for unexpected expenses.
When the middle class begins to crack at the seams
When we talk about the “middle class”, we are not talking about social status, but a sense of control over life, the ability to plan for tomorrow and maintain stability, develop, accumulate and not make ends meet. However, in recent years, the line between “average” and “barely enough” has become disturbingly blurred.
There are several obvious signs that the middle class is slipping away. It all starts with a financial shortage, which gradually becomes chronic. The salary is enough only for basic needs, and at the end of the month there is not enough money either for savings, or for a spontaneous purchase, or even more so for something far-sighted. A person begins to live “within the necessary limits”, and any force majeure immediately puts him before a choice: refuse or resort to credit.
And here begins another problem in the form of dependence on credit cards or microloans. They become not a means of convenience, but the only way to close gaps in the budget. Over time, this creates a debt burden that weighs more and more, making even day-to-day financial decisions difficult.
Another alarming signal is related to health costs. If earlier a private clinic was a choice for comfort, today even basic tests are becoming a luxury. People postpone preventive visits to the doctor because they are afraid of checks. Problems that could be solved simply and in time accumulate and not only in the physical sense.
We do not forget that all this is happening against the background of unstable work. The labor market has long ceased to be predictable: today there are orders or clients, and tomorrow they are gone. Salary does not increase for years, and real costs, on the contrary, creep up. Even those who work a full week feel financially vulnerable. And long-term goals in the form of savings for children’s education or retirement are increasingly being postponed until later, which increasingly resembles “never”.
Finally, housing, one of the symbols of middle-class stability, is becoming unaffordable. Apartments are becoming more expensive, rent is increasing, and owning a home is turning into a dream that is postponed “until better times.” Those who already owned a home are often forced to sell or rent it out to cover urgent expenses. Buying real estate today is not perceived as a stage of growing up, but a financial adventure.
It is worth noting that all these phenomena are interconnected and drag each other along. Losing the ability to save leads to debt. Debt makes it impossible to invest in yourself, which leads to a loss of prospects. And now the middle class is turning from a social condition into just a memory of a time when life was different. The consequences of such a creeping decline are serious not only for specific families, but also for society in general. After all, when the basis of the economy loses its support, everything that stands on it becomes shaky.
More and more often, we notice a picture when even those who felt “floating” yesterday are no longer sure about the future. Child care, a normal vacation, private medicine, and the ability to save become luxuries. And if global inflation continues, the list of such “forbidden” items will increase. It is worth understanding that without a healthy, strong middle class, society begins to falter both economically and socially.
The illusion of affluence: what the Ukrainian middle class hides
Today, the Ukrainian middle class no longer looks like the only strong pillar of society, its structure is becoming stratified, its positions are weakening, and its influence is rapidly decreasing. And while it is usually the middle class that is the economic engine and stabilizing force of the state, war, economic challenges and tax changes are changing its face faster than it can adapt.
Of course, the war became the main factor that “reshaped” the environment of the middle class. According to analysts, at the beginning of the full-scale invasion, the most vulnerable part immediately disappeared, that is, those who only outwardly imitated the middle class: bought housing or a car on credit, focused on an external lifestyle, without having a financial cushion. There were about 30% of them. Next came the turn of the periphery – people who are still holding on thanks to efforts, but already on the edge. At the same time, the core, which is formed from the most stable representatives of the class, remains, but only 10–15% of them.
It is quite clear that under such conditions, if the trend is not changed, the share of the poor population in Ukraine may increase to 75–80%. It will not just be a problem of social justice, but a risk of severe polarization of society, with all the consequences for the economy and political stability.
It is worth noting that the current model of the middle class in Ukraine was partly formed by the simplified taxation system. It allowed thousands of entrepreneurs, IT experts, lawyers, consultants and other self-employed professionals to develop. Thanks to the low tax burden, they were able to maintain stability and gradually move into the category of people with average incomes. But if this system were to be canceled or significantly limited today, at least half a million people would “drop out” of the middle class at the same time.
However, there has been a contradiction in Ukraine for a long time: on the one hand, there is a desire to preserve small businesses that provide for themselves and create jobs, on the other hand, we have a need to support socially vulnerable categories of the population. After all, the country is poor, and taxes are the main source of funding for pensions, medicine and social benefits. In such conditions, it is difficult to reduce taxes, but maintaining a balance is also critically important. Therefore, tax policy can affect not only business activity, but also the social structure of the country. And if it contributes to the narrowing of the middle class now, it will mean not only the loss of jobs or income, but the loss of the influence of that part of the population that under normal conditions keeps the country in balance: political, economic and social.
In developed countries, the middle class is the driving force of society, the voice of reasonable stability that shapes political decisions and prevents the system from descending into chaos. If the majority begins to live in poverty, and those who were supposed to be a support lose their support themselves, then such a country may be on the verge of a social explosion. And the question then is not who pays how much in taxes, but whether there will be those who will build the future at all.
The shrinking middle class signals that a large part of the population is losing confidence in their future. When most people can’t afford anything beyond basic expenses, the economy starts to slow down. Consumption is falling, the domestic market is weakening. And at the same time, social tension is growing in the form of a gap between those who can “afford” and those who can’t.
It should be noted that the real share of the middle class in Ukraine is much smaller than research shows. The reason lies in the fact that for many this status is determined not only by the level of income, but also by education, qualifications, cultural habits or life experience. In addition, in large cities such as Kyiv, the situation is somewhat better, because incomes are higher there, access to opportunities is wider. In the regions, the standard of living is significantly lower, and the pressure on the budget is much more noticeable.
The Shrinking Middle Class: Implications for the Economy, Education, and the State
If the middle class in Ukraine continues to disappear, it will not go unnoticed. The consequences will be not only in the wallets of individuals, but also in deep processes that affect the economy, society, education, politics and even national security. Let’s start with the economy. It is the middle class that spends the most on goods and services in the country. They buy apartments, renovate housing, pay for private medicine, visit restaurants, and open small businesses.
If this group shrinks, then the consumer market shrinks. A business focused on domestic demand begins to lose profits. Tax revenues are falling, because it is the middle class that usually pays taxes conscientiously. There is less investment in one’s own business, education or real estate, because there is nothing to do. The economy begins to “eat” itself.
At the same time, the social gap is growing. When the stratum that is somewhere in the middle, between the rich and the poor, disappears, then a severe polarization occurs. People who feel rejected begin to look for the culprits. Against this background, despair, aggression, mistrust spreads quickly. Young people who do not see life prospects choose either to leave or become radicalized. And where there is no social balance, there is no security.
The political system is also weakening. The middle class goes to the polls, supports independent media, and initiates local changes. If this part of the population disappears, politics quickly becomes filled with populism, money and manipulation. In such an atmosphere, the winner is not the best, but the loudest.
Education and science are also losing support. The middle class invests in their children: they hire tutors, pay tuition, support private schools and universities. If these people can no longer afford the cost of education, the system degrades. Teachers and lecturers are looking for stability in other fields or abroad. The country is slowly but surely losing its intellectual potential.
At the same time, trust in the state is destroyed. If a person does not see the path “from the bottom up”, i.e. does not have the opportunity to enter the middle class through education, work or entrepreneurship, he begins to look for other ways of survival. More often than not, such methods are illegal. Smuggling, corruption, “gray” schemes, cash arise precisely because of weak social policy.
All these factors are especially threatening in the conditions of war, because it was the middle class in the first months of a full-scale invasion that became a reliable rear support. Its representatives organized volunteer initiatives, donated money, logistics, and communications. Without them, the army’s efforts would be much less effective. If the state loses this category of citizens, it will also lose one of the most important components of internal stability.
Obviously, a shrinking middle class will destroy the foundation on which everything rests: the economic model, social cohesion, quality politics, the future of education, and even the country’s ability to survive in times of war. One can argue for a long time about criteria or taxes, but while millions of people choose between medicine and food every day, while education for a child or a vacation are perceived as something unattainable, the state is in a state of hidden social disaster that destroys bonds of trust between citizens and institutions. It is losing not just taxpayers, but bearers of stability, prudence and competence – that part of society that has always been a support both in the rear and on the front lines.
