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Poverty and wealth inequality on the rise in Mexico

August 17, 2011

An article I wrote a couple of weeks back after the publication of a new report on poverty in Mexico:

Rising poverty levels expose wealth inequality in Mexico

With Mexico’s economy making steady progress, one might expect poverty levels to be waning. Yet it seems the only gains being made are by a wealthy minority, while increasing numbers of less fortunate Mexicans are struggling to make ends meet.

Despite recent economic growth almost half of Mexico’s population is living in poverty, with a study published last Friday revealing a 3.2-million rise in the number of poor people from 2008 to 2010.

This increase means there are now 52 million people living in poverty, 46.2 percent of Mexico’s total population. Of these, 11.7 million people (10.4 percent of the population) live in extreme poverty, a figure that remains unchanged from 2008.

“Behind these figures are people with stories of injustice, dispossession, discrimination and insecurity,” Alberto Herrera, director of Amnesty International in Mexico, said in a statement. “Millions of people who live in poverty cannot continue to wait (for government action).”

Mexico’s most comprehensive study of poverty to date, the report was produced by the National Council for the Evaluation of Social Development Policy (Coneval by its Spanish acronym), an autonomous but federally funded agency.

Coneval measures poverty based not only on income but also on access to food, education, health care, housing and basic services. It considers a person who earns 2,114 pesos (181 dollars) per month to be poor, while those whose monthly salary is less than 978 pesos (84 dollars) in urban areas and 684 pesos (58 dollars) in rural areas are classified as extremely poor.

Paradoxically, this rise in poverty coincides with a period of sustained economic growth in Mexico, Latin America’s second biggest economy. Despite suffering in the 2009 economic crisis, Mexico experienced growth of 5.5 percent in 2010, its strongest showing since 2000. Economists expect further growth of around 4.5 percent this year, while in May economic activity rose by almost double what was predicted.

In this context rising poverty levels merely emphasize the widespread inequality of wealth in Mexico, which is home to the world’s richest man, Carlos Slim. According to Coneval the poorest states are those in the rural south: Chiapas, Guerrero, Oaxaca and Puebla. Mexico’s agricultural industry is one of the poorest sectors, with less than half of workers earning above the minimum wage.

Facing criticism from social development and human rights groups for failing to prioritize poverty reduction, the government has attributed the rise to the global recession and a worldwide increase in food prices.

“This government like no other has sought to give opportunity to the poor,” President Felipe Calderon said in response to the report. Yet the latest figures do little to support his statement. Using a different, income-based methodology, Mexican newspaper La Jornada reports an additional 13 million people fell into poverty during the first four years of the Calderon administration.

Although Mexico may be considered poor compared to the United States, it is the third wealthiest country in Latin America, according to another report published last month. Fundacion Ethos, a nonprofit think tank based in Mexico City, has produced a multidimensional poverty index ranking the countries of Latin America in terms of “household poverty” (income, health, access to clean water) and “environmental poverty” (security, democracy, gender equality). Mexico comes third behind Chile and Brazil as the least poor countries in the region.

In the Ethos Poverty Index, Mexico scores better in terms of household poverty than in environmental poverty. With regard to the latter, Liliana Alvarado Baena, director of Ethos Fundacion’s international poverty observatory, said “strengthening democracy and institutions, as well as overcoming the problems associated with violence and insecurity, would help reduce poverty more effectively.”

The Ethos report also urges Mexico “to promote adult education and school attendance of children aged between 7 and 15. Improving education is not only an imperative of welfare itself but also a mechanism to raise the income levels of the population.”

While Alvarado agreed that the financial crisis and rising food prices contributed to the increase in poverty, she maintained that “it is essential to have a profound reflection on the efficiency of policies to fight poverty because it is unacceptable that the growing number of poor depend, almost entirely on external factors or macroeconomics.” The government, she said, “should integrate new mechanisms that reduce the vulnerability of the poor from these shocks, such as policies to generate income and savings.”

Others have argued that the cause of increased poverty in Mexico is the country’s antiquated labor laws, which are said to discourage greater investment in the country. Senator Manlio Fabio Beltrones of the Institutional Revolutionary Party (PRI) said the labor reforms currently being debated in Congress are indispensable to achieving sustained growth rates and combating the widespread poverty and inequality in Mexico.

While different parties and organizations favor different solutions, there is at least some agreement across the political spectrum that a country with such wealth and economic potential should not be abandoning half of its citizens to suffer in poverty.

And a week later I wrote this follow-up piece on the local situation:

Poverty creeps up in Jalisco, despite denials

Proud Jaliscienses and the state tourist board like to boast that “Jalisco is Mexico.” The home of tequila, mariachi music and traditional charro horseriders, this state is said to be the perfect encapsulation of the nation’s cultural heritage. But there’s also another long-standing tradition to be found here that the state’s leaders are less keen to brag about: poverty.

Currently enduring record levels of unemployment, Jalisco is home to 43,000 people living in extreme poverty. Only in Veracruz and the Estado de Mexico are there more people living in such conditions, although as these are the country’s three most populous states the figures are broadly in line with national averages.

A recent study by Coneval, the National Council for the Evaluation of Social Development Policy, reveals the number of poor people in Jalisco rose by 71,000 from 2008 to 2010. The report says there are now 2.7 million people living in either extreme or moderate poverty in Jalisco, equivalent to 36.5 percent of the state’s population.

Senior government officials moved quickly to dismiss the importance of the Coneval report. “A constant effort over the last 15 years has enabled a reduction in extreme marginalization,” said Government Secretary General Fernando Guzman Perez Pelaez, who also claimed that “other studies” confirm Jalisco to be one of the states with the most employment. Yet in June unemployment in Jalisco rose to a record high of 5.8 percent, with 784,000 citizens left without full-time work.

However, Felipe Vicencio Alvarez of the Ministry of Social Development in Jalisco admitted that poverty levels have risen but said progress has been made in improving education, health services and basic housing requirements..

The worst afflicted areas in Jalisco are the northern town of Mezquitic in Bolaños and the southern coastal municipalities of Cuautitlan and Villa Purificacion. In Guadalajara, the poorest neighborhoods are Lomas de Tabachines, Balcones de la Cantera and Arroyo Hondo, all in the northern municipality of Zapopan.

Senator Ramiro Hernandez Garcia of the Institutional Revolutionary Party (PRI), one of the front runners to be the next state governor, has called for a new form of governing that considers the needs of the poor and not just the well-being of a small minority. He argues that government policy should prioritize job creation and better wages, and work toward the creation of a social security network for the unemployed.

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