Days after turning 65, José Guadalupe has gone to the headquarters of the Ministry of Welfare in Mexico City, the agency in charge of transferring financial aid from the federal government, to be a beneficiary. “He promised help to the elderly and we want to see if it is true,” says this man from the State of Mexico, referring to President Andrés Manuel López Obrador. Since the pandemic began, José has not been able to find work as a builder, only as a farmer, and they pay him 120 pesos a day with which he does not have enough to live. “Many times they promise and there is nothing, but right now we are better off with López Obrador,” he says through a blue mask, “imagine, if you had to wait to turn 68 before, I’d be three years away.”
At the beginning of the pandemic, López Obrador resisted pressure from the private sector and refused to create new aid aimed at the unemployed, arguing that his social programs would be sufficient. A year later, the pandemic has caused the highest levels of poverty since 2014: a total of 55.7 million poor people, 7% more than in 2018, and extreme poverty has climbed to 10.8 million, a jump of 24 %. The damage to the Mexican economy, with its worst contraction since 1932, is still not fully healed. Gross domestic product (GDP) remains below where it was in 2019.
The “poor first”, the president’s favorite slogan, loses its footing if you look at the data. Despite the fact that three out of every ten Mexicans receive transfers from federal programs, everything indicates that they are failing. NGOs and independent analysts assure that, compared to the previous government, López Obrador’s social spending helps fewer people in poverty, benefits more wealthy households and leaves those who lost their jobs due to the coronavirus crisis without protection.
The poorest lose
The Government ensures that 95% of the people living in extreme poverty receive, through these programs, financial aid. However, the National Survey of Household Income and Expenditure, published by the National Institute of Statistics and Geography (Inegi) last week, suggests that this is not the case. An analysis of these data by the Institute for Inequality Studies (Indesig), an independent research center, concludes that within the poorest 5% of the population only 35% of families receive help. In 2016, six out of 10 of these households, almost double, were getting assistance. For the richest 5% of the population, the effect has been the opposite. In 2016, only 7% of households in this group received government aid, but by 2020 the percentage rose to 19%.
“We are not only concerned that the real data is so far from what the Government says,” says Maximiliano Jaramillo-Molina, economist and founder of Indesig. “We are also concerned that this data, in previous years, was much higher. It seems that, at least in terms of scope, with the new design of social programs, we removed beneficiaries from the poorest households and added beneficiaries from the richest households, ”says Jaramillo-Molina.
If the amounts received by the poorest 10% and the richest 10% are compared, the pattern repeats itself. In 2018, the last year of the Peña Nieto government, the former received 18% of the total volume of support and the latter 4%. In 2020, under López Obrador, the poorest decile had 10%, eight points less than two years ago, and the richest, 8%, an increase of four points.
The current government’s social policy error begins, analysts agree, with the elimination of the Prospera program of the previous Administration. Prospera combined educational, health and food aid for the poorest households. When it started in 1997 under the name Progresa, it reached 300,000 low-income families. Over time, it expanded the range of support and grew to reach seven million households in 2016.
Of the package, the Government of López Obrador was left only with the educational scholarships, now named Benito Juárez, and reduced the maximum amounts that each household received. “The whole family, regardless of the number of children they have in primary or secondary school, gets 800 pesos a month, while with Prospera the maximum amount was around 2,000 pesos. There was a higher limit, ”says economist Diego Alejo Vázquez, director of research at the NGO Oxfam. “The government should have studied the design change in greater depth and made a more gradual transition.”
To the elimination of Prospera is added the fact that many of the Government’s social policies have a universalist character – they are distributed to the entire population equally – without being focused on the most disadvantaged. An example of this is the extension of pensions to all older adults. “The universalism of the programs is very good as a goal, but without this meaning taking away the poorest households that already had coverage,” adds Jaramillo-Molina.
The impact of the pandemic
The crisis has left 3.8 million newly poor people, two of them in extreme poverty, as published this week by the National Council for the Evaluation of Social Development Policy (Coneval). Behind these numbers, there are flaws in the design of the Executive’s flagship programs, which were not focused on those most affected by the pandemic: adults of working age and residents of cities. Young people building the future it focuses on students and apprentices, and pensions for the elderly and retired. “It is a crisis that cannot be addressed with these supports because by definition they are designed for people who are not in the labor market and the amounts are too small to compensate for the loss of wages,” says Vázquez.
Either Sowing Life, the farmer support program, serves those most affected by landfills. “We do not believe that it will have a very large effect because it is urban poverty that is going to grow the most,” says Vázquez. In Mexico, about 70% of the population lives in cities. “The challenge is to make strategies more flexible and not be married to the priority programs of the president’s electoral promise.”
Despite the failures, López Obrador does not seem open to a change of course and has even rejected Coneval’s data on the increase in poverty. “I do not accept the result of that survey. I have other data and I think people are receiving more support, “he said on Friday, without mentioning what other sources of information he was referring to. Millions of Mexicans like José Guadalupe support the president and recent polls place his approval rating between 50% and 60%. In the previous Administration of Enrique Peña Nieto, programs such as The Crusade Against Hunger they were a source of money diversions and corruption. The head in charge, Rosario Robles, is in jail and was investigated for this case. However, results are measured according to what beneficiaries report, so that, despite corruption, previous programs were more successful in helping those most in need.
Oxfam’s Vázquez disputes the official narrative that “everything was done to prevent impact.” The Mexican government allocated around 1% of GDP to fiscal stimulus, the weakest response among all emerging countries, according to the IMF. “More could have been done, there is fiscal space for additional measures,” he says. At the beginning of the pandemic, Oxfam proposed subsidies to the social security contributions of SME owners so that they did not lay off their employees and a universal income for informal workers. “It would have cost around 1.2% of GDP, which is a considerable amount but it could have prevented much of the social crisis that we now see.”
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Eddie is an Australian news reporter with over 9 years in the industry and has published on Forbes and tech crunch.