Guaranteed Income for Mexico’s Most Vulnerable

Oxfam has published a report warning that the COVID-19 outbreak has resulted in a crisis that disproportionally affects the most vulnerable sectors of Mexico’s population. Oxfam stresses the importance of taking social protection measures aimed directly at those less equipped to cope with the crisis, including universal basic income (UBI).

As described by The Balance, UBI is “a government-guaranteed payment that each citizen receives. The intention behind the payment is to provide enough to cover the basic cost of living and provide financial security.” UBI can be directed at the entire population or segmented according to criteria like income level. When a massively disruptive event like a pandemic happens, UBI may prove vital for the sectors of the population with the lowest income. The United Nations Development Program recently published an op-ed in support of UBI. The piece says that "if there is not a minimum income floor to fall back on when this kind of massive shock hits, people literally have no options. Without the means to sustain themselves, they are far more likely to succumb to hunger or other diseases well before COVID-19 gets to them."

UBI has historically had more traction in developed countries than in emerging ones. Finland, for example, started a two-year experiment in 2017 where 2,000 unemployed citizens were given US$630 per month. A study evaluating the UBI experiment was released this May. Deutsche Welle points out that some critics have called the scheme a "flop." The German broadcaster says that “much criticism has focused on the minimal effect of the experiment on employment prospects.” Nevertheless, Deutsche Welle argues that “there was a significant statistical difference in how happy (the experiment participants) felt. When well-being is on a better level, people have better chances to get a job.”

Even if governments were to realize the importance of providing a safety net for their most vulnerable citizens, they may worry about the financial viability of such a scheme. Governments may feel they are already under too much financial pressure to fund a UBI plan. On this point, Joan Cortinas-Munoz, a researcher at Sciences Po Paris, commented to France 24: "In the crisis we are in, I do not see how a government would embark on UBI, with the pressure of financial markets, banks and international financial organizations on countries' budgets."

However, one should weigh the cost of implementing UBI against the cost of millions of people suddenly losing their means of sustenance in the face of an unexpected crisis like the one COVID-19 has brought on. As Oxfam highlights, “the greatest economic risk is that people lose their sources of income permanently and enter into spirals of poverty due to debt non-payment, catastrophic expenses or health problems. Economically, it is of the utmost importance that people maintain their jobs with a living wage to cope with quarantines.”

UBI is gaining momentum in Mexico. During a recent online conference, several lawmakers have voiced their support. Senator Kenia López stated that “UBI is essential for overcoming the current (pandemic-related) crisis.” She specified that the income would amount to MX$3,207 (US$140.2) per month, aimed at unemployed citizens. Likewise, Deputy Porfirio Muñoz Ledo said that “it is time to implement such a program. It could be applied temporarily, while the crisis lasts, and then make it mandatory.” Muñoz suggested that UBI be mainly directed at the population that is in extreme poverty.