When the Connecting Screw Falls Out
Once a pillar of social stability and a symbol of “normal life,” the middle class
today is sliding downward in the social hierarchy. In Europe and the Western
Balkans, this social stratum is gradually deteriorating under the pressure of rising
living costs, the weakening of value systems, and the uncertain demands of the
labor market. Globalization, accelerated technological change, and increasingly
pronounced economic inequalities further aggravate its position, leading to
income stagnation, a decline in purchasing power, and a loss of a sense of long-
term perspective.
According to contemporary theoretical frameworks, the middle class consists of
those who possess economic, organizational, and cultural capital. A person must
have a stable income and some property, the ability to influence or control
resources within their work environment, as well as access to education, cultural
content, and social networks that enable advancement. In addition, it is expected
that a member of the middle stratum has a developed class consciousness – that
they recognize their own position in society and are ready for collective action.
However, fewer and fewer people truly meet these criteria. Instead of a coherent
social group, the middle class increasingly resembles a dispersed collection of
individuals trying to maintain the appearance of security in a rapidly changing
world. And when the middle class begins to disintegrate, society is left without its
crucial “connecting screw” and cohesive factor that keeps the community
together.
The fact that the concept of class is changing in contemporary society is also
indicated by the writings of the well-known economist Branko Milanović. In his
analyses, he points out that modern capitalism no longer functions according to a
clear division between workers and capitalists, but that a new social structure is
emerging which he calls the “homoplutic elite” – a stratum of people who
simultaneously own capital and earn high labor incomes. He explains that these are individuals who belong both to the working and capitalist layers – they
possess capital but also have high earnings from their work. This includes
executive directors, doctors, programmers, and other professionals who, based
on their level of income and property, fall outside the framework of the classic
definition of the middle class. Their position complicates the social picture
because the boundaries that once formed the foundation of class division are
being erased. However, an even more significant conclusion is that these people
have no interest in changing the system, since it is precisely that system which
provides them with a comfortable life and enviable security.
While the homoplutic elite consolidates, the traditional middle class becomes
more vulnerable. Therefore, many states are redefining their economic and social
policies in order to mitigate the collapse of the middle layers and reduce
inequalities. Greece recently announced an extensive tax reform in favor of the
middle class. A special focus in that reform was placed on citizens with annual
incomes between 25,000 and 60,000 euros, whose tax burden is being reduced.
Young people up to 25 years of age with incomes up to 20,000 euros were also
included, which leaves them more room for living expenses, investment, or
savings. Similar initiatives are appearing in Italy and Spain, particularly in terms of
affordable housing, as well as other economic measures aimed at preserving
these social layers.
In the Western Balkans, the middle class is in an even worse position – it lives on
the political margins and is fragmented by deep social divisions. Formally, it is
perceived as the “backbone of society,” but in practice, it lacks institutional
support. It lives on the edge of security and constant threat of poverty, with
limited possibilities for upward social mobility. In addition to low wages and
insecure jobs, an additional burden comes from various parafiscal and tax levies,
as well as the deterioration of social and healthcare protection systems.
Assistant professor at the Faculty of Philosophy in Belgrade, Stefan Janković,
points out that the erosion of the position of the middle class in Serbia – and
indeed in the region – is visible through three processes: the unaffordability of
housing, the collapse of public services, and the precarization of professions. As
he explains, housing prices and rents are rising faster than wages, and without
inherited capital, owning an apartment has become almost impossible for many segments of the middle class. In addition, the precarization of professions,
especially in the IT sector and creative industries, further complicates the
maintenance of a middle-class standard of living. Although they are carriers of
cultural capital, these members of society often lack stable sources of income,
which further worsens their position. He explains that, in practice, a status gap
occurs – a discrepancy between the high aspirations of the middle class and their
real opportunities.
“This phenomenon is becoming increasingly pronounced and will be a key
challenge in the coming decades. Unlike in the West, where politicians often
target the middle class in their discourse, in our case this stratum is an
unarticulated and politically neglected social group,” says Janković.
At the same time, he adds, the middle class – traditionally reliant on strong public
services such as education and healthcare – faces the erosion or complete
withdrawal of the state from these sectors. The result is the growth of “para-
costs” that burden the household budget, such as private tutoring for children or
medical expenses. In such a context, everyone is forced to apply their own
individual survival strategy, which only further deepens inequality. What is at
work, he explains, is a “neoliberal logic that replaces public responsibility.” This, in
essence, means the favoring of the free market, the privatization of public
services, the reduction of the role of the state, and the individualization of risk.
The individual is told: “fend for yourself – and if you have no money, take another
job.” The system does not recognize this as its own failure to ensure equal
opportunities, but as the personal failure of an individual who is “not competitive
or capable enough.”
Furthermore, middle-class status is being questioned due to the development of
artificial intelligence, which adds another layer of challenge. Routine white-collar
jobs are becoming replaceable, reducing their market value and the likelihood
that educated people will be able to retain their jobs and their status.
The Middle Class in the Region
Professor at the Faculty of Organizational Sciences, Slobodan Miladinović,
emphasizes that the middle class does exist in Serbia and in the region, but that it
faces great economic pressures. In Serbia, it is divided into two layers: the first
consists of entrepreneurs, lower-level directors, and large farmers with moderate economic or organizational capital, while the second includes educated
professionals with high cultural, but low economic and organizational capital.
“The majority of middle-class members have salaries ranging from 80,000 to
150,000 dinars, and often even below that. These amounts are high compared to
workers’ wages, but they cannot provide a satisfactory quality of life,” Miladinović
claims, adding that instead of subsistence-level wages, the middle stratum should
earn an income that enables them to meet status-related needs such as expenses
for culture, additional education, and professional development.
He believes that the middle class should serve as a guarantor of social stability,
but that, instead, social instability and crisis are shaking this group. According to
him, extremist political forces often exploit this situation, assimilating members of
this class—especially those who have become impoverished—by drawing them
into their political agendas.
Full professor at the Faculty of Economics of the University of Zenica, Jasmin
Halebić, emphasizes that the position of the middle class in Bosnia and
Herzegovina does not differ from that of the middle class in Serbia.
“As a social and economic category, it is on the margins of political interest and
reflection. The wars of the 1990s destroyed the former social structure, and the
economic transition established the rules of the game on completely different
foundations. The former middle class has significantly eroded. Members of this
stratum now mostly work in the public sector, public enterprises, education, and
healthcare. Jobs for the middle class almost no longer exist in the manufacturing
industry, construction, hospitality, or trade,” he notes.
He adds that numerous economic factors today endanger the position of the
middle class.
“The median wage in Bosnia and Herzegovina is significantly below the average
wage, which indicates that more than 50 percent of employees earn less than the
average income,” says Halebić.
He emphasizes that the opportunity to implement public policies that would have
strengthened the middle class in areas such as taxation, transfers, and housing
was missed. He notes that a progressive tax policy, with a broadened tax base encompassing not only income from labor but also income from capital, could
reduce income inequality.
“A reform of property and inheritance taxes should also be placed on the agenda
of left-oriented political actors. Property inequality is even twice as high as
income inequality,” Halebić explains.
Professor Almir Alihodžić, also from the same faculty, points out that the financial
stability of the middle class in Bosnia and Herzegovina, as well as in the wider
Western Balkan region, is closely connected to the bank-centric structure of the
financial system and the limited capacity for investment outside the banking
sector. He stresses that, due to an underdeveloped capital market and a lack of
alternative investment channels, citizens predominantly deposit their savings in
banks, which contributes to a linear growth of deposits, but not to an increase in
the economic stability of the middle class.
“Savings certainly would not grow to such an extent if the capital market were
more developed,” he notes, emphasizing that banks do not sufficiently use the
available deposits to finance the real sector, which limits the ability of the middle
class to participate in economic growth through entrepreneurship or investment.
A stable financial income structure and the ability to save once enabled the
middle class to plan for the future and invest, but the situation today is markedly
different. Under the conditions of global crises, inflation, and economic insecurity,
incomes are becoming increasingly uncertain, and saving is becoming ever more
difficult.
Can the Middle Class in Serbia Become a Social and Political Actor?
Stefan Janković points out that the answer cannot be unambiguous, since the
middle class is not a homogeneous structure. Some of its segments – particularly
those in the public sector and in the cultural and creative industries – tend to be
politically active, while others often remain in silent loyalty to institutions or
retreat into the private sphere. Therefore, he is not optimistic regarding its
proactivity in social processes.
Janković emphasizes that, ultimately, the middle class is – or at least has always
been – the connecting screw of society. Its erosion brings the risk of stratification,
political passivity, and the growth of inequality, though not of complete disappearance. He highlights that it is not sufficient to analyze the middle class
only through income and occupation; rather, it is necessary to understand the
logic of the system that shapes class relations and, if necessary, to change that
system in the future.
“Under the conditions of global techno-feudalism, the question arises as to how
much power states even possess. Systemic policies are needed – from tax and
housing policies to education – but their implementation is difficult because there
is a lack of reliable statistical data on class structures. Without political will and
precise data, states often treat the middle class merely as a collection of
individual households – and that is not a policy,” he argues.
Professor Alihodžić believes that for the middle class to regain its rightful place
under the sun, clear strategies are needed in the fields of both the economy and
the valuation of knowledge.
“In order for the middle class to be re-affirmed, it is necessary to create an
environment in which knowledge and effort become the main generators of social
security and mobility. Without such changes and reforms, the middle class cannot
achieve much,” Alihodžić claims.
He considers that a good initiative in the field of economics would be to establish
institutions that would grant credit ratings to well-performing export-oriented
enterprises, thereby strengthening private entrepreneurial initiative. In addition,
work should be done on developing the money and capital markets, especially in
Bosnia and Herzegovina and some other countries of the region. He also stresses
the importance of revising privatized companies, reforming public administration,
and simplifying bureaucratic procedures.
Halebić points out that the social consequences of failing to recognize the
importance of the middle class for the functioning of society would be
catastrophic.
“That would lead to further stratification and inequality in income and property.
Once a large number of people realize that they are in a position that does not
bring the expected standard of living and that the prospects for change are
fading, they may turn toward radical attempts to alter such a state,” he warns.
Miladinović emphasizes that the complete fall of the middle class from its role as
the “connecting screw,” which it has held for centuries, is not possible; however,
its marginalization and impoverishment are certain, especially during periods of
major social upheavals. In a more distant perspective, it may survive as a status
group, but one part could remain in political apathy, another could support the
elite for personal gain, and a third could join party activism. In this way, its
coherence would be further undermined.
Ultimately, this could lead to the disappearance of class structure altogether,
reducing society to a division between a small, powerful elite and a passive mass
– a system in which a few rule over all others, without checks, balance of power,
or genuine democracy.
At the Crossroads
Data on the economic performance of the Western Balkan countries do not
inspire much hope when it comes to the future of the middle class in this region.
The region lags behind the European Union in economic parameters. According to
the World Bank classification from 2023, all countries of the region fall into the
category of middle-income countries. Montenegro has a gross national income
per capita of 10,480 USD, Serbia stands at 12,282 USD, while the territory of
Kosovo (and Metohija) is at the bottom with only 5,660 USD.
Although for 2025 a regional GDP growth of 3.7 percent is projected, driven by
higher consumption and investment, this pace is still insufficient to catch up with
the level of the European Union, nor is it enough to significantly expand the
number of members of the middle class. At the same time, high public debt in
most countries limits the capacity for investment in education, healthcare, and
infrastructure – the very pillars on which the middle class depends.
Demographic trends are also unfavorable. Depopulation and negative natural
growth make social and economic progress increasingly difficult. In such
circumstances, the middle class in the region remains a “trapped” stratum –
caught between limited opportunities and constraining institutions, without
strategic support from public policies that would make it a genuine driver of social
development and positive change.
Inset: The Tax Position of the Middle Class in Serbia
The tax system in Serbia heavily burdens the middle class. Although the income
tax rate is relatively low, indirect taxes – such as the 20% value-added tax (VAT) –
disproportionately affect this segment of the population. The middle class derives
little benefit from social transfers, while tax reliefs are mostly directed either
toward the most vulnerable or the wealthiest groups.
In addition, parafiscal levies, such as various administrative fees, contributions,
and charges, further strain the financial situation of employees and entrepreneurs
within this stratum. High labor-related costs, including social and health insurance
contributions, often reach levels that discourage employment.
The absence of progressive taxation further slows the economic advancement of
the middle class, as there is no effective mechanism to reduce inequality and
stimulate consumption within this social group.
Author: Maja Jovanov