Mexico, Private Sector Lobbies for Solidarity Salary

On 2 June Mexico’s largest business lobby, the Confederación Patronal de la República Mexicana (Coparmex), urged the government led by President Andrés Manuel López Obrador to implement a 'solidarity salary' to protect jobs.
Mexico Coparmex Solidarity Salary

Analysis:

President López Obrador is facing mounting criticism from various sectors that he is failing to do enough to protect jobs at risk due to the coronavirus (Covid-19) pandemic. Coparmex’s proposal followed the release latest official unemployment figures for April, which showed a rise in unemployment. However, López Obrador continues to downplay the impact on jobs and the economy, recently appearing optimistic despite Mexico’s central bank (Banxico) forecasting that Mexico’s GDP will contract by 4.6%-8.8% in 2020, fuelling concerns that he is out of touch with reality.

  • Under Coparmex’s proposed scheme, employers would pay a portion of their employees’ salaries, and the government would cover the rest. Workers with low income jobs would receive 100% of their salary, while those on higher salaries would receive a lesser percentage. Coparmex highlighted that this initiative would protect 19.9m formal jobs.
  • On 1 June the president of Mexico’s national statistics institute (Inegi), Julio Santaella, said that in April 12m people had stopped working or were seeking employment due to the economic impact of Covid-19.
  • In his daily press conference yesterday López Obrador said that in April 555,000 people had lost their jobs, but forecast that in May fewer than 350,000 people will lose their jobs, adding that, “if all goes well, no more than a million jobs will be lost” due to the pandemic.
  • López Obrador is also facing pressure from the agricultural lobby group Consejo Nacional Agropecuario (CNA) over budget cuts announced on 29 May for the agriculture and rural development ministry, including eliminating fuel subsidies for farming and industrial fishing. According to CNA, the cost of diesel fuel for Mexican farmers and fishermen is now around M$19 (US$0.87) per litre, triple the M$6.7 per litre that US agricultural producers pay for fuel.

Looking Ahead:

López Obrador continues to bank on one of his government’s flagship infrastructure development projects, the 'Tren Maya', as grounds for optimism regarding economic revival, claiming yesterday that it will create 80,000 new jobs this year.

In brief: Mexico expects “asymmetrical” economic recovery

* Mexico’s Finance Minister Arturo Herrera has cautioned that the country’s economic recovery will be not be as fast as the contraction it suffered due to the coronavirus (Covid-19) pandemic. In a video posted on Twitter, Herrera said that the trajectory of Mexico’s economic recovery, which will “go hand-in-hand with the recovery of jobs and salaries”, would be less “V-shaped” and more like a 'tick' (comparing it to the Nike logo), explaining that sectors will reopen but with restrictions. Restaurants, for example, would have different timetables and more space between tables. Herrera added that the government will take measures to contribute to the economy’s recovery, including bringing forward spending plans, particularly on projects that will most stimulate job creation and investment, citing the construction of Santa Lucía airport in the Estado de México and the Dos Bocas oil refinery in Tabasco state.

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