The middle class in Mexico got skinny in the last 13 years

The middle class is an important engine for the Mexican economy. Its shrinkage in the last 13 years shows the lack of adequate public investment and the creation of jobs with low productivity, according to official figures.

The middle class is an important engine for the Mexican economy. Its shrinkage in the last 13 years shows the lack of adequate public investment and the creation of jobs with low productivity, according to official figures. Stock image
The middle class is an important engine for the Mexican economy. Its shrinkage in the last 13 years shows the lack of adequate public investment and the creation of jobs with low productivity, according to official figures. Stock image

The Mexican middle class declined by 10 percent in real terms between 2005 and 2018. This meant that at least 2.1 million people lost purchasing power, in an environment of precarious employment and wages. The decline of the middle class "is due to the fact that we are not being able to generate the number of well-paid jobs required by the increase in our working class," Dr. Luis Foncerrada Pascal told SinEmbargo.

For the economist, the shrinkage of the middle class was also due to the fact that "as of 2000, the net migration of Mexicans into and out of the country was negative. [This] means that more [Mexicans] come back from the ones that come out [and that] the escape valve that we had when not generating enough jobs was closed in the United States."

In Mexico, people with comparable incomes of three (7.6 thousand pesos) to eight (20 thousand pesos) minimum monthly salaries belong to the middle class, according to figures calculated by the Data Unit of SinEmbargo, according to official information (Inegi). , Conasami) and the parameters of the Organization for Economic Cooperation and Development (OECD).

"A strong and prosperous middle class is crucial for any successful economy and [for any] cohesive society. The middle class supports consumption, drives much of the investment in education, health, and housing; and plays a key role in sustaining social protection systems through their tax contributions, "the study reads" Under pressure: the small middle class "(2019).

"The OECD also notes that" societies with a strong middle class have low crime rates, enjoy higher levels of confidence and life satisfaction, as well as greater political stability and good governance. "

In mid-November 2018, still, President Enrique Peña Nieto presumed "unpublished figures" of job creation, with a total of 4 million 061 thousand 243 positions in 2013-2018.

Despite its importance as an economic engine worldwide, the international organization warns that for the past 30 years, the middle class has been pressured by the increase in its cost of living above inflation, and by its wage stagnation in a context of job insecurity, in which "one in six jobs with medium incomes face a high risk of automation".

Mexico, in that sense, is not the exception; but a critical example.

While the average middle class of the OECD countries is made up of 61 percent of the population, in Mexico the middle class is less than 45 percent of the population.

"The internal market is the income of the people; and if these are coming apart [...] we will not grow on the internal market. " This happens because "we do not give certainty for investment or promote productivity, or technological progress, or education," exemplified the former director of Monetary and Credit Policy in the Ministry of Finance and Public Credit (SHCP), Luis Foncerrada Pascal.

THE NATIONAL CRISIS

The middle class in Mexico is composed of 19 million 380 thousand 451 employees, equivalent to 44.98 percent of the 43 million 082 thousand 478 people employed with income, according to figures from the Bank of Indicators (BI) of the National Institute of Statistics, Geography and IT (Inegi).

However, if we consider that many of these people represent the head of the family that provides support resources for their household, the proportion according to the OECD parameters would not reflect the impact of the employed persons with incomes, in their family environment.

In other words, we know that almost half of the Mexican population has average income; But how many homes in Mexico belong to the middle class?

The Inegi data on household income indicate that, between 2005 and 2016, 31 percent of households had comparable incomes of three to eight minimum wages, so that they would belong to the middle class (according to OECD parameters).

This classification of households by income decile shows that, as a third of the population can be considered middle class, 59 percent would have low income, in addition to 10 percent with high or at least higher than average income.

In the course of 11 years, there is also a stable growth of 31 percent on average per decile, which responds to the demographic growth of recent years.

The proportion of growth of each of the deciles, compared to the number of total households, draws another reality in Mexico, where "there is a precarisation of employment [and] a precarisation of wages", as he said to doctor Luis Foncerrada Pascal.

The official data analyzed by the Data Unit of this digital medium indicate that, between 2005 and 2016, the real increase of low-income households (of less than one and up to two monthly minimum wages) was twice as high as that of the households with medium incomes and six times higher than deciles with higher incomes (more than eight minimum wages).

Thus, in recent years, 4.7 million households added to the low-income decile, 2.3 million to medium income and 742 thousand to high income.

PRECARISATION AND POVERTY

Since 2008 "what has been happening, year after year, is that yes it generates around one million new jobs below three minimum wages because they lose around 300 or 400 thousand who earned more than three minimum wages", the economist, Luis Foncerrada Pascal, said.

This is consistent with the results of the analysis (2018) of the Universidad Iberoamericana Puebla on labor income in Mexico according to which, in the last six years, the Government "destroyed sources of employment in high-paying jobs and only showed employment growth in wages of low remuneration ".

The figures of the Inegi during the period indicate that during the presidency of Enrique Peña Nieto 4 million 676 thousand 314 jobs of up to two minimum wages were created. In contrast, all jobs above two minimum wages fell with a total of 2 million 348 thousand 898 lost jobs.

As a result, while jobs with lower incomes increased 39 percent, jobs with medium and higher incomes decreased by 14 percent.

The generation of jobs with low productivity is consistent with the stagnation in the reduction of the population with labor income lower than the cost of the food basket.

Despite the fact that this type of income poverty fell by 1.2 percentage points between 2013 and 2018, figures from the National Council for the Evaluation of Social Development Policy (Coneval) show that Mexico worsened in the last 13 years.

Between 2005 and 2018, the population with labor incomes lower than the cost of the food basket increased by 6.2 real percentage points. This is that, instead of affecting 34 percent of the population that works, today four out of every 10 Mexican workers suffer from poverty by income.

According to Dr. Foncerrada, Mexico does not generate adequate and sufficient jobs to cover its demand due to the lack of investment, since "investment is the only thing that really generates jobs for you".

The economist recalled that public investment during the last six years was the lowest in the last 80 years (except for the 1997-1998 period). This "error" - together with the current crisis of distrust, legal uncertainty, property rights, within a framework of social conflicts and public insecurity - "prevents more private investment from being generated".

The figures of the Bank of Mexico refer that nowadays, on average, the public sector invests three percent of its Gross Domestic Product (GDP). Along with private investments, equivalent to 17 percent of GDP, including foreign direct investment, National investment amounts to a maximum of 20 percentage points.

With this level of investment, Foncerrada said, "there is no way to grow more than two percent"; and therefore, there is no way to reverse social inequalities and shortages or boost productivity per capita.

by Agency

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