A Tourniquet Against Mexico’s Job Hemorrhage

Since the beginning of the COVID-19 outbreak, Mexico has seen more than 1 million jobs and 10,000 formal businesses vanish. In fact, unemployment figures may be many times higher than that, as some prominent leaders have said. COPARMEX, Mexico’s foremost employer organization, has urged the Mexican government to implement three measures for stopping the job hemorrhage afflicting the country.   

COPARMEX’s triple proposal is called Solidary Remedies and calls for an investment of US$9.1 billion, roughly 1 percent of Mexico’s GDP. Its first element is a monthly Solidarity Salary. It is made up of a contribution from the government, employers and workers. Its goal is to avoid layoffs due to closing of operations or income contraction that companies are experiencing due to COVID-19. The Solidary Salary is meant to guarantee full income for Mexico’s most vulnerable workers. The total estimated investment for this initiative adds up to approximately 0.7 percent of GDP. “The solidarity salary seeks to guarantee income for those who earn between one and three minimum wages. This measure is a form of employment subsidy that has already been applied in other countries to protect employment, including Chile, Argentina, Brazil and Uruguay,” said COPARMEX’s Labor Commision President Armando Guajardo in an interview with Aristegui en Vivo.

The second element has been dubbed Solidarity Insurance. It is a monthly minimum wage (US$163.63) for all formal workers who have lost their jobs. Expansión notes that this measure would apply to workers that became unemployed between March 15 and September 30. It would have a duration of six months and apply to up to 1.5 million people. The estimated investment required would be equivalent of 0.14 percent of the national GDP. COPARMEX adds that the Solidarity Insurance is in line with “all civil society actors and legislators who have promoted the need to implement a Minimum Vital Income to compensate for the lost income the pandemic has caused.” A more radical version of this is the Universal Basic Income, a government-guaranteed payment that each citizen receives to cover the basic cost of living and provide financial security. Actors like the UN and Oxfam have voiced support for Universal Basic Income.

COPARMEX calls the third element of its proposal a Solidarity Bond. It is a job-creating stimulus to recover the employment loss of recent months. This measure involves a scheme that encourages job creation with wages above the minimum wage: the government would provide up to three minimum wages per worker. 

In order to finance Solidary Remedies, COPARMEX proposes “the reasonable acquisition of public debt.” The organization argues that Mexico has healthy public finances that allows it to take on debt to face the current crisis. If acquiring debt is not accepted, COPARMEX proposes “the reorientation of public spending: for example, canceling works that are not essential today, such as the Santa Lucia Airport, the Dos Bocas refinery and the Mayan Train, among others.”

COPARMEX points out that the current health crisis is evidencing an imbalance between the contribution of the government and businesses to Mexico’s well-being. “The federal government has only announced 0.1 percent of GDP in direct fiscal measures to support companies and formal workers, while workers and employers contribute about 7 percent of GDP in income taxes,” the organization said.