Friday, November 16, 2012

Gross economic disparity still a hard fact of Mexican life

National Council on Public Policy and Social Development says road ahead will be arduous for EPN

On a lonely corner in downtown Mérida, a food vendor hopes to lure a few pesos from the last vagrant customer. The Mexican economy is still heavily "informal," and consists of millions whose sole option is street retailing. The profit on each transaction is just enough to eke out a minimal living, but the self-employed get no prestaciones laborales - benefits to which the educated and skilled are entitled. Forty-six percent of Mexicans - about 52 million people - experience some degree of chronic poverty.

*Updated June 11, 2013*
Guadalajara -
President-elect Enrique Peña Nieto, who will be sworn into office two weeks from tomorrow, will take the reins of a nation scarred by profound social and economic inequality, where the well-to-do earn, on average, 25 times that of the country's poorest.

Compounding that unpleasant reality are widespread unemployment in many regions and economic sectors, persistently substandard educational institutions, a health care system which often fails to address the needs of the sick, the declining purchasing power of the peso and rising prices of basic foodstuffs. Between three and four million people have been added to the poverty rolls since 2006.

Such were the brutal conclusions this week of the director of Mexico's National Council on Public Policy and Social Development (CONEVAL), who based his findings upon studies conducted at the National Autonomous University of Mexico and reports prepared by experts at other institutions.

Director Gonzalo Hernández Licona noted in a year end CONEVAL report that 11.7 million Mexicans have no access to health care and education, and don't earn enough to purchase the minimum food needed for daily sustenance. "(Peña Nieto) is going to get a country with enormous inequalities, and also one where women lack many opportunities," said Hernández when the report was released.

CONEVAL's report noted that since January, domestic food prices have increased an average of 8%. But staples such as frijol and eggs have skyrocketed - 22% in the former case and 20% in the latter. The Council said market volatilities will continue, and forecast a continuing decline in the the peso's purchasing power. It said the urban poor had grown by some 3.2 million in recent years as a result.

"It's necessary to create programs focused on raising incomes, in which the Secretary of Economic Affairs, the Bank of Mexico and the Hacienda (Mexico's tax authority) will all have to participate," the Council noted in recommendations to Peña Nieto's incoming PRI administration.

One research report quoted by CONEVAL concluded that Mexico must focus more on the agriculture sector, and give priority to the production of food to feed its burgeoning population, with a median age of only 26. That report noted that Mexico used to prohibit the importation of corn and beans - staples of the national diet - conserving cash in the process. This year's severe drought in the United States will be a major headache for the new government, since nowadays Mexico must buy huge amounts of both from north of the border. U.S. corn and bean prices have risen sharply since last summer.

Those factors aside, CONEVAL emphasized that the primary problem with the economy remains the lack of jobs and chronically low pay, often times even for the well-educated. The Council noted that when adjusted for inflation, and if measured by actual buying power, average household incomes did not rise during the 18 year period between 1992 and 2010.

"The world economic model is worn out, especially in Latin America"
Nov. 18 - So said the rector of Mexico City's prestigious National Autonomous University in an interview with the Notimex news agency last week. A highly respected academic in this country, and a frequent commentator on public affairs, José Narro Robles had some interesting observations:

"The prevailing world economic model is exhausted, especially in our region. It's simply given all it had to give. It's a model which, although it's generated riches, doesn't have the capacity to equitably distribute wealth. The current market concentrates wealth in just a few, it places everything in just a few hands. It's converted all of Latin America into the region with the highest social and economic inequality in the world. Here we have persons who are among the wealthiest on the face of the planet, and among the poorest on the face of the planet."

Dec. 11 - A Mexican national institute reports that 29.3 million people - almost 60% of the currently employed labor force - work in the informal economy. That's another way of saying that they're self-employed and earn a mere subsistence income. Included within their ranks are street vendors and small retailers, domestic and agriculture workers and home based businesses. Most such workers are males between the ages of 25 and 44. They receive no benefits from any quarter, and enjoy none of the legal protections which employed workers have.

June 11, 2013 - Mexico's Statistical Institute reports that the country has almost 30 million citizens between the ages of five and 17. Three million of them work outside of the home, but only about half receive pay. The young laborers typically are employed as itinerant vendors, or in small family enterprises. Their work is uncompensated, but they are indispensable to the unit's economic survival.

July 23, 2013 - Enrique Peña Nieto announces plans to get more workers on real payrolls
Oct. 12, 2013 - In a land with many poor, Mexican millionaires are increasing by leaps and bounds

Oct. 17 - Ending poverty key focus of incoming PRI government
Apr. 23 - Economic inequality the primary cause of Mexico's insecurity, says Manuel López Obrador
Nov. 13, 2011 - Mexico's southeastern states - including Yucatán - suffer endemic child poverty

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