Author: Francisco Orozco, North region leader at FAIR Center of Business School of Tecnológico de Monterrey.
Dear readers, at the beginning of this year I have had the opportunity to attend different presentations on economic expectations for this year and it was to be expected that they would also talk about the most important thing for 2024, which is the “super electoral year.” .
In these sessions, topics that I believe are relevant to my generation and those to come have been independently addressed: living wage, affordable housing, and retirement. I have also brought these topics to mind due to the amount of “memes” and content generated on different social networks with messages and legends such as “it is not expensive, you earn little”, “me in 1992 wasting time resting instead of being buying land”, “like when you find out that you won't have a pension like your parents”. And no, they are not my imagination because I am a “senior millennial”.
These are issues that must be put on the table to find solutions and put them on the public policy agenda not only at the national but also international level.
For this year, the minimum daily wage in Mexico went from 207 pesos to 248.93 pesos, which would be a minimum monthly wage of 7,468 pesos. This wage pales in comparison to countries like Australia or Luxembourg, where the minimum wage can exceed $20 USD per hour. Even within Latin America, Mexico often ranks below nations such as Costa Rica and Chile. This makes me think about whether in Mexico we have a decent salary.
A living wage goes beyond covering basic needs. It should allow savings, education and recreation, essential factors for a full life. The Decent Work Observatory (OTD) mentions that a decent salary would have to be between 15 thousand to 20 thousand pesos per month. According to the Mexican Social Security Institute (IMSS), only 2 out of every 10 people have a decent or high salary.
Access to housing is another critical problem. While in European countries such as Germany or the Netherlands there are social housing policies that facilitate access to homes at reasonable prices for the low-income population, in Mexico the situation is complicated by factors such as the high cost of properties and real estate speculation. . Furthermore, the shortage of affordable housing in urban areas has led to an increase in informal settlements and the sprawl of cities.
The lack of a regulatory framework that controls prices and speculation in the real estate market has exacerbated this crisis. Furthermore, corruption and lack of transparency in the real estate sector have limited the effectiveness of public policies. As I have heard from other colleagues, the government confused real estate policy with housing policy.
Finally, retirement and pensions. The current system, based on AFORES, has critical limitations that could leave many without adequate financial security in their retirement. Mexico faces the challenge of restructuring its approach to guarantee a dignified retirement for all. I get it, the system was broken and there is no way to go back to the past. The returns, affected by market volatility, do not ensure a sufficient pension.
The people who will retire with AFORE will receive an average of approximately 4,475 pesos according to the National Commission of the Retirement Savings System. AFORE pensions are up to 50% lower than those of the 1973 law regime.
Mexico's younger generations must prepare for a reality where pensions could be insufficient. Increasing longevity and declining birth rates aggravate this problem, making the need for reforms urgent.
The panorama we face today in Mexico is a reflection of systemic challenges that require urgent attention and concrete actions. It is not enough to recognize the gap between our country and others in terms of living wages, access to housing and retirement security; It is imperative that we seek innovative and equitable solutions.
We need policies that not only increase the minimum wage, but also promote quality jobs with benefits and job security. In this election year it is very important to question the candidates on how they will deal with these issues.