Mexico’s Social Policy has gone through a series of transformations since the implementation of the neoliberal agenda by the Federal Government.

 

During the 80s, Mexico experienced the effects of the adjustment policies derived from the debt crisis, along with its entry into the General Agreement on Tariffs and Trade in 1986. This was a difficult time for the most vulnerable population: from 1983 to 1988 real wages contracted 7.7%, driving 17.1% of the population below the extreme poverty line.

 

The first ambitious attempt to fight poverty through a comprehensive approach goes back to the Programa Nacional de Solidaridad (National Solidarity Program). Solidaridad emerged in 1988 with a specific mandate to break the intergenerational poverty circle by the direct improvement of living standards, productive capacities and regional development. It operated through the coordinated actions between Federal Social Ministries, State and Municipal Governments, ONG’s and Communities. Particularly, social participation became a key mechanism for the definition of priority actions, based on traditional forms of community deliberation.  However, in the 90s Mexico went through an agitated period of economic and political crises that counterweighed any potential positive impact that Solidaridad could have had in the improvement of the living conditions of less-favored population. Under this scenario, social wellbeing experienced a significant drop: by 1996, 37% of the population did not have sufficient income to buy a basic food basket (food poverty) and 69% also could not pay for services such as health, education, clothing, housing and transportation (asset poverty).

 

In 1997, in an effort to contain the fall in social indicators, the Federal Government started Progresa (Education, Health and Nutrition Program), a conditional cash transfer program with the objective of ending the intergenerational transmission of poverty through investing in human capital.

 

Progresa introduced important innovations in Social Policy: a long-term perspective of social development; conditional monetary transfers; an innovative targeting procedure; economic empowerment of female-head-of-households; and an advanced design involving an impact evaluation mechanism. Between 1998 and 2000, beneficiary households steadily increased from 1.5 to 2.5 million.

 

In 2000 Mexico went through its first Federal Government partisan succession. The right-wing National Action Party (PAN) took office, ending 71 years of government under the centrist Institutional Revolutionary Party (PRI). At this moment, food poverty prevailed on 24.1% of the population, while 53.6% experienced asset poverty, a remarkable reduction compared to the post-crisis period described above.

 

Under the new Administration, Progresa changed its name to Oportunidades. Although the program design remained nearly untouched, its reach increased significantly: it was expanded to urban areas and the educational component was extended to high school level. Since its beginning, Oportunidades operated throughout the entire national territory, contrary to its predecessors.

 

Nevertheless, from 2000 to 2012, the years of Oportunidades, the population experiencing food poverty remained around 20%. Yet, between 2000 and 2006, food poverty decreased to 14% of the population, positively affected by a dynamic national and international economic environment.

 

In 2012, with the return of PRI to the Federal Government, Oportunidades changed its name to Prospera, introducing also four action lines related to production, labor, finance and social inclusion. These action lines offer preferential enrolment of Prospera’s beneficiaries to other federal social programs addressing to the four referred areas.

 

Moreover, Federal Government announced the beginning of the Cruzada Nacional contra el Hambre (National Crusade against Hunger), an inclusive strategy that combines Federal resources to fight hunger and extreme poverty. This Cruzada recovers Solidaridad’soperational mechanism, emphasizing social participation and coordinated actions between the three levels of Government.

 

The current Federal Administration calls this comprehensive policy, which includes the Cruzada and Prospera, a “New Generation Social Policy”. It is a response to the fact that low-income levels in households have become a primary factor of social impoverishment in Mexico. According to the National Council for the Evaluation of Social Development Policy (CONEVAL), households’ access to food, education, health services, social security, basic services and quality of housing, increased from 2010 to 2014. In contrast, the population whose income levels remain below the wellbeing line and the minimum wellbeing line[i] increased in the same period to 53.2% and 20.6%, respectively.

 

So far, the present analysis of Mexico’s Social Policy has centered on the evolution of major National Social Programs. However, it is important to consider how recent changes to the economic environment pose new challenges for policy makers. For instance, high informal employment, currently around 60% of total, implies that an important sector of the population does not have access to benefits such as health and day care services, housing loans and retirement pension (Social Security), usually linked to labor market as it is financed –largely- by payroll taxes.

 

In view of this situation, a new set of social programs was created to grant safeguards to those excluded from Social Security, giving way to a Social Protection System financed through general Government revenues.

 

Hence, Seguro Popular (Popular Insurance), a public health non-contributory insurance implemented by the Federal Government on 2003, provides health services to those without access to medical care. It is mainly addressed to poor and uninsured families, highly exposed to poverty due to catastrophic health expenditure.

 

Likewise, the Federal Program Pension para Adultos Mayores (Pension for Elderly People), implemented on 2007, provides a monetary transfer to persons 65-years-old and over whose earnings are below a specific threshold and who generally are not beneficiaries of a contributory pension.

 

In view of the foregoing, since 2012 Mexico’s Social Policy consists in a series of complementary and overlapping policies and actions, comprising a national strategy to fight hunger, paired with a cash conditional transfer program and the coexistence of social security and social protection systems. This may seem as a comprehensive framework to accomplish some of the primary functions of a welfare state in a country as Mexico: guarantee minimum welfare conditions and fair income redistribution between social groups and throughout the lifecycle.

 

Nonetheless, Social Policy in Mexico, during the past 30 years, has been showing only modest results: according to the latest CONEVAL Poverty Report, in 2014 nearly one out of two Mexicans lived in poverty while almost one out of every ten subsisted in extreme living conditions.

 

Then, why does Mexico’s Social Policy have such a limited impact? The answer itself could be tackled from different angles; yet long-term economic performance sheds some light on the subject. Mexico’s economic growth has been relatively slow in this past 30 years, including as well the adverse effects of two economic crises, 1995 and 2008 (see another article in this issue.

 

Thus, since the income component of poverty has been the Achilles’ heel of Social Policy, a public debate has recently taken place over the need to improve the earnings of those at the bottom of the social ladder, as a mean to stimulate the whole economy.

 

On the one hand, a thorough review of the minimum wage was proposed. Since real minimum wage started growing below inflation in the 80s, it has lost three quarters of its purchasing power. At present, minimum wage is barely enough to afford the cost of a basic food basket and other basic goods and services. Consequently, political and academic voices have jointly proposed a raise of the minimum wage.

 

On the other hand, a not-so-recent discussion has emerged about universal coverage and access to social protection that, according to the World Bank, remains fundamental to end poverty and foster shared prosperity. Even so, ensuring universal access to social protection requires a major financial and institutional redesign, primarily through the unification of contributory and non-contributory programs under a social framework financed by general government revenues.

 

While Mexico’s Social Policy reveals a significant investment on welfare and social development, key concerns such as minimum wage and universal coverage are now at the core of a social debate that cannot be delayed any longer. Moreover, further steps on the unification of the welfare system shall be taken, accompanied by a comprehensive multi-sectorial strategy mainly focused on economic growth, comprising the creation of formal jobs and the recovery of income levels for the most vulnerable population.