82% of young people earn insufficient wages
In Mexico, 82.2 percent of young people who are not students have an insufficient salary, making the country the second nation with the lowest salaries within that segment of the population, compared to 16 other Latin American economies, reported David Kaplan, senior in the Labor Markets division of the Inter-American Development Bank (IDB).
In his participation in the Retirement and Health Seminar organized by the Mexican Association of Consulting Actuaries (AMAC), Kaplan explained that the salary is considered sufficient if the wage rate is equal to or higher than one dollar 95 cents per hour.
In Mexico, only 17.8 percent of young people have a sufficient salary, a level that is low compared to Chile, Argentina, Uruguay, Panama, and Costa Rica, where it is 50.8, 49.9, 48.9, 46.6 and 45.4 percent, respectively.
The young people who have the lowest salary in Latin America are in Honduras, which has the first position in the ranking since only 15.8 percent have a sufficient salary since in 84.2 percent of the young population the remaining salary is insufficient.
Guatemala, Nicaragua and El Salvador rank third, fifth and fourth for low wages, with only 18.4, 20.1 and 23.3 of their young population with sufficient income.
"Mexico's labor market functions surprisingly poorly. I think it's some combination of productivity, it seems that this government is moving in the direction of defending labor rights, raising the minimum wage and not just having unions, but unions that really represent workers," Kaplan said in a REFORMA consultation.
The existence of unions, he added, that doesn't really improve union conditions and high taxes on small wage workers also make Mexico the second country with the lowest wages for young people.
He also mentioned that the low minimum wage also means that young people's wages are especially low in the regional comparison.
"The labor market is not working well, it's a fact. I think the minimum wage is part of it, as well as the existence of unions that don't really improve union conditions and the social security issue. We can see high taxes on small wage workers. So it's a combination of several factors.
According to the National Commission of the Retirement Savings System (Consar), most of the Afore generation will not have access to medical care from the Mexican Social Security Institute (IMSS) when they reach old age.
"Only 23.9 percent of contributors under Law 97 will have a retirement pension, while 44 percent will retire with the right to medical care in the IMSS.
Regarding the pension reform that the government plans to carry out in the middle of the six-year period, Kaplan commented that if the mandatory contribution to the pension account is increased, which is currently 6.5 percent of the worker's Base Salary, it is necessary to look for a mechanism that does not affect people with lower incomes.
That is, avoid raising the contribution to the same level for all workers regardless of the size of their salary.