Mexico: the economy is down and the cartels are hiring

The average income of Mexican households fell by 12.3% between 2008 and 2010, the government’s National Statistics and Geography Institute (INEGI) reported on July 15. The richest households generally lost the most in percentages, but poorer households suffered more because their income was already so low, according to the National Survey of Household Income and Expenditure, which the INEGI conducts every two years. The decline in income reflects a 6.1% contraction of the Mexican economy in 2009 in the midst of a world economic crisis that started in the US; the Mexican economy recovered partially in 2010 with a 5.4% expansion. (La Jornada, Mexico, July 16)

The long-term economic situation is no better, according to José Luis Calva Téllez, a member of the Economic Investigations Institute at the National Autonomous University of Mexico (UNAM). Since the government began applying neoliberal economic policies in 1982, the Mexican economy has grown at an average rate of 2.1% a year, which is the worst economic performance in Latin America, Calva says. The minimum wage, the standard on which other wages are based, has lost 71.3% of its purchasing power over the same period; even the comparatively well-paid unionized workers have seen the purchasing power of their salaries fall by 50%. The main source of new job growth in Mexico, according to Calva, is narcotrafficking, which he says has created 600,000 jobs.

Meanwhile, the Mexican federal government is insisting that the economy has stabilized after weathering the international economic crisis. Economy Minister Bruno Ferrari announced recently that the “fall in incomes is just a perception.” (LJ, July 17)

From Weekly News Update on the Americas, July 17.

See our last post on Mexico.