Cleaning staff, this Thursday in the streets of Mexico City Sáshenka Gutiérrez / EFE
The new poverty data have yielded unexpected figures. At the peak of the pandemic, after an almost total shutdown of the Mexican economy and without significant support for the poor, income poverty increased in Mexico by only three percentage points. This is five percentage points less than the expected increase according to official estimates. The pandemic was expected to leave 10 million people in poverty, but the balance was half. The number, well below expectations, leaves Mexico surprisingly better off than expected, but not for that reason in good condition.
There are 67 million people living below the income poverty line, an injustice for a country that is the 15th largest economy in the world, and has 13 world-class billionaires. The data show that in Mexico 52.8% of the population live with incomes of less than 3,560 pesos per month and with basic needs. An intolerably high number.
Extreme poverty does not give up, it increases.
There are 10.8 million people living in extreme poverty, an increase of 2.1 million compared to 2018. Mexico's inability to reduce its extreme poverty is a true case study, as reported by the Economic Commission for In Latin America and the Caribbean, the problem could be solved with better social policy and an annual increase in public spending of only 75,000 million pesos –that is, 2.8% of the fortune of the 13 billionaires.
Thus, in Mexico every day is one more day in which the Mexican government decides not to end poverty and the billionaires remain unscathed.
The social policy of the López Obrador government has great areas of opportunity and this is evident in three great lessons that we observe in the poverty data.
The first is the failure of the health system.
In 2020, the number of people who did not have access to health services increased by 16 million people, from 20 to 36 million, that is, a 78% increase compared to two years ago.
This happened because López Obrador changed the health system, turning Seguro Popular into Insabi, without there being a significant increase in the budget.
Thus, many people who were known to be beneficiaries of Seguro Popular now do not know that they have the right to Insabi and worse still, on many occasions they do not even have the capacity to access that right because there is not enough budget.
Mexico spends on public health the same as countries in sub-Saharan Africa and much less than the average for Latin America.
And this is something that López Obrador has not changed and that has taken a heavy toll on the pandemic.
There is no bigger failure for the Government than its healthcare system.
The second lesson is for the middle classes and has to do with the urgency of demanding a change in Mexico's social policy.
It is time for the government to stop betting on only reducing poverty and start betting on expanding the middle class, which is not the same.
In Mexico there are 33 million people who are not technically poor, but who still have incomes below the poverty line or deficiencies.
Although poverty can be reduced with the support of social programs, the generation of a middle class cannot happen this way. Creating a middle class requires a functional economy and good wages. It requires moving social policy away from cash transfers and more towards employment policies.
Wages are the Achilles heel of the Mexican economy and the main reason why the middle class in Mexico does not increase. In a country of 127 million inhabitants, the new poverty data shows that only 30 million Mexicans are not poor and do not have basic needs. Considering this as a (very preliminary) estimate of the possible maximum size of the middle class in Mexico, the data would confirm that being middle class is a rarity, a privilege to which only 23.5% of the population has access. The middle class is stagnant and has failed to increase by more than 5% in 12 years.
López Obrador raised the minimum wage, but because the amount of formal employment has declined due to the pandemic, many of the gains made with wage policy have been lost. At the beginning of his six-year term, López Obrador had managed to reduce working poverty to its minimum since 2008. Unfortunately, the data did not hold and today it is attacking 39% of the Mexican population again. Therefore, only two states showed increases of more than three percentage points or more in the size of the non-poor and without deprivation: Campeche and Chihuahua.
The situation has been even worse for women, the weakest link in all of Mexico's social policy, and an important third lesson for the López Obrador government. During his six-year term, men's current income has increased while that of women has decreased, despite the fact that, according to Coneval data, men's income was already 4.2% higher than that of women. Thus, in Mexico poverty has the face of a woman, with 2.5 million more poor women than men.
Women were the most affected by the pandemic because they were forced to leave their jobs to take care of care, especially as schools closed.
And most likely also because of the little support that exists for working mothers.
The budget for programs that promote equity between men and women has increased very little, and remains insufficient for the size of the inequality.
Much more research will have to be done on these data, and especially on those states in which we observe reductions in poverty.
Despite the pandemic, reductions in poverty rates were observed in three states: Zacatecas, Colima and Nayarit.
All relatively small states and with relatively less precarious initial conditions.
It will also be important to identify possible methodological changes and, where appropriate, discuss their validity with the authorities.
It seems to me that a central part of the exercise, and I highly value the fact that Coneval has done it, is that the data is shown with and without the effect of transfers from social programs.
Apparently, social policy as a whole only manages to reduce poverty by 2 percentage points (2.5 million people).
A very minor effect.
In general, if the data leave us a generic lesson, this would be: we have a Mexico that is too poor and with an extremely ineffective social policy.
There is so much to do.
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