Government Cuts Employment Support Program in Face of COVID-19

In times of crisis, governments have to cut their spending. One of the programs being cancelled for the time being is the Employment Support Program (PAE), which funded resources for employment and worker’s training in Mexico since its inception in 2001. The Ministry of Finance and Public Credit (SHCP) cut its budget and redirected it to the Economic Reactivation Plan, reported El Financiero.

In accordance with the Federation's Expenditure Budget, MX$704 million (US$29.5 million) was set aside for the project in early 2020, of which MX$197 million (US$8.26 million) was destined for providing training and scholarships. Not long after, Mexico’s entire outlook shifted as the health emergency’s shutdown of the economy wreaked havoc in both the public and private sector. As a result of decreased government spending, the program, operated by the Ministry of Labor in conjunction with Mexican state governments, is now off the table. El Financiero estimates that 1,200 work positions are at risk due to the budget adjustment.

According to the clauses in the agreement, the Ministry of Labor can terminate the agreement in advance via communication stating the motivations for the transfer of budget, to be given 30 calendar days in advance of the termination. “I inform you that this Ministry of the federal Executive is unable, materially and legally, to continue with the development of the Merit Coordination Agreement, corresponding to fiscal year 2020,” state the official letters dated May 6. However, government workers told El Financiero that the message, dated May 6, came as a surprise.

“They told us about this decision in a sudden manner, we do not know what will happen, if the SNE will disappear or if they will fire us. They have not paid us; they have not told us if there will be any support. We do not wish to attack anyone, we would like the government to be clear,” workers said.

State directors for the National Employment Service (SNE) showed concern to El Economista about state employment services, worrying that while some states will be able to continue such projects on their own footing, it will disappear completely in others. The director for Chihuahua considers the program to be crucial for economic reactivation. The services offered through SNE offices benefit not only companies but the vulnerable people who have lost their jobs and are looking for a new opportunity as well. State directors in Zacatecas and Morelos support this message and urge the government to reconsider the program cuts.