Mexico rebrands flagship social welfare programme in bid to help working poor

Mexican government launches ‘new’ social welfare scheme in the hope that it will make better progress at bringing down poverty levels which remain stubbornly high, partly due to poverty wages.

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The Mexican government of President Enrique Peña Nieto has unveiled Prospera, an evolution of the Oportunidades social welfare programme that has, in its various forms, given conditional cash transfers (CCTs) to Mexico’s poorest since the 1990s. The scheme, founded as Pronasol in 1989 before being renamed Progresa in 1997 and Oportunidades in 2002, was the first major social programme of its kind in Latin America to give poor families cash in exchange for their meeting conditions such as enrolling their children in school and getting regular health check-ups. It went on to inspire other similar schemes across Latin America, including Brazil’s Bolsa Família – perhaps the most well-known and successful of them all.

However, there is a feeling among many in Mexico that Oportunidades was failing to make a meaningful long-term impact on the country’s social panorama, with atrocious levels of poverty and inequality refusing to budge over the years. This has led the government to relaunch a widened programme under the new name of Prospera, in the hope that it will finally reverse a trend of stagnant and widespread poverty across Latin America’s second biggest country in terms of population and economy. According to a press release on the official government website of the Secretariat of Social Development (Sedesol), “families which are [covered by] Oportunidades will continue to receive the support that they have done to date, but will now be able to count on new benefits”.

Presenting the revamped Prospera in Mexico City earlier this month, Peña Nieto – who has stated that bringing down poverty levels remains foremost among his administration’s ambitions – described how “the successes of [Oportunidades] have been recognised internationally but its limitations are becoming more and more apparent each day”. At present it covers 6.1m families, but the government hopes to expand this to 6.5m by the end of Peña Nieto’s term in office in 2018. Among the new aspects of Prospera is an attempt to better coordinate the different elements of the wide-ranging social programme: education, health, nutrition, income generation, and access to social rights.

The amount handed out in grants to families will be increased, with an emphasis on these payments being made to female heads of family in order to increase female empowerment, and access to credit will also be made easier for women. There will also be a greater focus on the quality of education, with the Mexican Social Development Minister Rosario Robles remarking that “we already have young people (enrolling) in school classrooms, but we’re unable to guarantee that they are receiving the best education possible”. Prospera will also hand out grants to students from Mexico’s poorest families to encourage them to go through university and support them during their studies.

Furthermore, there will be a drive to ensure that the programme is more effective in urban areas, with more effort having gone on tending to the needs of Mexico’s rural poor in the past. Pregnant women and young children will also have greater access to nutritional help in order to aid child development, while youths covered by Prospera who are looking for work will be prioritised in careers programmes and government-run training schemes.

Mexican President Enrique Peña Nieto, pictured here at the relaunching of the Prospera social welfare programme. Photo courtesy of Sedesol – Mexican Government website.

Poverty is still rife across Mexico, and has made barely any sustained progress in decades. In 1992, 53% of the population lived below the national poverty line. Twenty years later in 2012, that figure had come down by just a single percentage point to 52%. There are 53.3m Mexicans classified as living in poverty, and based on current trends this is projected to rise to 55m by the end of Peña Nieto’s term in 2018. The country also has one of the highest GINI ratings in the world, denoting high income inequality between Mexico’s richest and poorest citizens.

These levels of poverty are in spite of near-total employment, with the unemployment rate at just a shade over 5%, meaning that the vast majority of Mexico’s poor are in work. This comes down largely to the pitiful wages that many Mexican workers receive, with a minimum wage that works out at just 67 Pesos (US$5) per day. Earlier on in September, shortly after the Peña Nieto government had relaunched Prospera, the leftist opposition Partido de la Revolución Democrática (PRD – Party of the Democratic Revolution) introduced a bill to the national Senate proposing a 23% increase in the minimum wage, to around 83 Pesos (nearer to US$7) a day.

This came after the party had initiated a similar proposal in the state government of the Federal District, which covers Mexico City and is governed by the PRD, earlier this year. The proposal at the federal level was subsequently backed by the centre-right official opposition party, the Partido Acción Nacional (PAN – National Action Party), and finally by the governing Partido Revolucionario Institucional (PRI – Institutional Revolutionary Party), with this cross-party backing meaning that the bill should hopefully pass.

However, as much as this bill is a step in the right direction, it is arguably nowhere near enough in a country where millions still struggle to put food on their families’ tables while multimillionaires – such as the world’s richest man, Carlos Slim – go from strength to strength in a seemingly parallel universe. It is but one small measure among the many needed to correct a decades-long crisis of falling relative incomes for many millions of Mexicans, with the purchasing power of low-paid workers having fallen 71% since 1976.

This is a fallout from the great Latin American Debt Crisis of the early 1980s, which was sparked by a Mexican default and led to many of the region’s economies turning to policies of austerity and wage cuts in an attempt to control hyperinflation. While most other countries have regained lost ground by putting money back in the pockets of workers and raising incomes, in Mexico this has not happened to anything like the same extent, for a variety of social, political and economic reasons.

This means that today, according to Antonio Prado from the UN’s Economic Commission for Latin America and the Caribbean (CEPAL), “the minimum wage is not enough for people to survive on”, with a recent report from CEPAL noting that “Mexico is the only country in the region where the value of the minimum wage is lower than the threshold for the poverty line”. The Mexican government’s calculation of a basket of essential goods, including food and everyday needs as well as other items such as clothing, transport, and living and health costs, is valued at 2,518 Pesos a month (US$194) – well above the monthly minimum wage of 2,018 Pesos (US$162). This situation is even graver when one considers that the calculated cost of essential goods for a family of four climbs to 10,072 Pesos (US$777), five times the minimum wage.

The task ahead for Mexico’s legislators is extremely tough, not least due to economic complications that could arise out of the situation where numerous indices such as pensions, government subsidies and even traffic fines are linked to the minimum wage, meaning that they would all rise substantially if the minimum wage is increased by the amount the PRD are proposing. Yet the fact also remains that, as long as Prospera and other government schemes continue to do the admittedly worthy job of aiding young Mexicans and giving them better life prospects, these measures will still be far from sufficient to tackle Mexico’s historic poverty and inequality if the jobs that are available are still so poorly paid.

A worker in a field in Guanajuato, central Mexico. Millions of Mexican workers don’t earn enough, even on the official minimum wage, to escape poverty. Photo courtesy of El País.