Despite the passage of economic reforms that President Enrique Peña Nieto promised would bring new levels of prosperity to Mexico, the number of people living in poverty rose by two million during the first two years of his administration.
A report released by the National Council on Social Development Policy (Coneval) last week showed that the number of Mexicans living in poverty rose from 53.3 million in December 2012 – the month Peña Nieto took office – to 55.3 million in late 2014.
Today, 46.2 percent of Mexicans live in poverty, almost half the population.
Coneval determines someone to be living below the poverty line if they earn less than 2,542 pesos ($156) per month in cities or 1,614 pesos ($99) per month in rural areas; and have no access to any of the following: education, health services, social security, food and water, reasonable living conditions and basic services such as electricity, gas, potable water and sewerage.
Since taking office, Peña Nieto has passed major reforms to the energy, telecommunications and education sectors, yet the nation is yet to reap the fruit of these changes.
Instead, the value of the Mexican peso has plummeted. While one dollar was equivalent to less than 12 pesos in 2011 it is worth almost 17 pesos today.
Mexico’s new poor are concentrated in two states
The report revealed that the central states of Mexico and Veracruz have been the worst hit. Mexico State – Peña Nieto’s home state – accounted for 42 percent of the almost two million Mexicans who fell below the poverty line in the two-year period, while Veracruz accounted for another 24.7 percent.
The southern, highly indigenous, state of Chiapas remains the poorest state in Mexico, with 74.7 percent of the population living in poverty. Levels of poverty and extreme poverty also rose in the states of Morelos, Oaxaca, Sinaloa, Coahuila, Hidalgo and Baja California Sur.
Coneval cited collapsing income and job scarcity as the main reasons for the rise in poverty, rather than cuts to social programs.
Social spending actually held steady, leading to a slight decline in the number of people living in extreme poverty, from 11.5 million in late 2012 to 11.4 million at the end of 2014.
The majority of Mexicans, Conveval found, are only above the poverty line because of government social assistance programs that help provide access to education, health services and food assistance.
Moreover, food scarcity now affects 63.8 million Mexicans up from 60.6 million people at the end of 2012.
What needs fixing?
One of the challenges facing the Peña Nieto administration is that a huge chunk of Mexico’s population works in the vast informal sector, paying no taxes and receiving little or nothing by way of welfare.
Elderly informal workers are particularly vulnerable and with only a meager state pension to rely on (at best) many are unable to retire or remain almost entirely reliant on younger family members to support them.
Meanwhile, income inequality remains a serious problem. The top 10 percent of Mexico’s population enjoy 35 percent of the income, while the bottom 10 percent make just 1.9 percent of all earnings.
“Mexico isn’t poor, but most of its population is, and this needs to change,” Mexican NGO Acción Cuidadana Frente a la Pobreza told the Wall Street Journal.
“In Mexico poverty affects those who work. It’s not just the unemployed that fall into poverty, as happens in developed countries. In our country, income from labor is insufficient to be above the poverty line,” the NGO affirmed.