Mexico’s leader says poverty is his priority. But his policies hurt the poor.
By Maria Abi-Habib and Oscar López
The one government service this neighborhood outside Mexico City could rely on was the local elementary school run out of an abandoned train carriage. It was a vital lifeline for the residents, most of whom live in the remnants of a once-vibrant railway station.
Each morning, families squatting in the cavernous cabooses in Naucalpan would rouse their children for a full day of school, part of a federal program to support working parents by extending hours beyond the usual half day followed by most Mexican elementary schools.
But the extended day is gone, a casualty of the government’s focus on revamping the welfare system in a shake-up that economists warn will hurt Mexico’s poorest and hobble growth for the world’s 15th-largest economy.
After clinching victory in 2018, Mexican President Andrés Manuel López Obrador promised the country’s disenfranchised that he would end their neglect, while pushing a slogan of “first the poor.” The party he founded, Morena, was launched a decade ago with a platform to reduce inequality and empower the millions of marginalized Mexicans most political parties had traditionally neglected.
But halfway into his six-year term, the plight of Mexico’s lower classes has worsened, and economists say it is not solely because of the withering effects of the pandemic but the result of mismanagement of welfare programs and the economy.
For Alicia Guadarrama Monroy, who lives with her two daughters and their children in Naucalpan, the school’s extended hours meant all the adults in her household could work. But the school day now ends about noon and one of her daughters must stay home to care for the children, depriving the family of a much-needed salary.
“It was such a good school,” she said. “But now it’s changed and it’s not the same. There is no support. There is nothing.”
Beyond Naucalpan, hundreds of thousands of parents across Mexico face struggles after the federal government scrapped the aftercare program this year. López Obrador’s office did not respond to requests for comment.
Mexico was one of the only major global economies that did not substantially increase spending to mitigate the pandemic’s toll, emphasizing a balanced budget over taking on debt to support the country’s most vulnerable.
But the pandemic’s effects coupled with a lack of government support led an additional 3.8 million Mexicans to fall into poverty at the end of 2020. Today, 44% of Mexicans — nearly 56 million people — are destitute, according to the most recent government data available.
About 5.2 million students dropped out of school during the pandemic, according to government figures released last year, roughly 14% of all school-age children in Mexico. Many have yet to return — some left to work alongside their parents out of financial need, others because the reduced school hours could not support their parents’ work schedules.
Inflation has also slowed the economic recovery, with consumer prices rising 7.99% for the year through June, a 21-year high, reducing purchasing power for necessities such as tortillas and cooking oil.
“The level of economic activity in Mexico is still below the pre-pandemic level, and it is probably the only country in Latin America where that is the case,’’ said Alberto Ramos, head of Latin America economic research for Goldman Sachs.
Despite Mexico’s deepening poverty, López Obrador remains one of the world’s most popular leaders, with an approval rating of about 65%. The widespread support has left political observers scratching their heads.
For economists, the answer is simple: The government gutted existing welfare programs in favor of putting cash in citizens’ hands, with few strings attached.
Although many economists support direct cash transfers, the new system has scrapped the needs-based criteria of previous programs, leading to concerns that the money is not going to those who need it or will not spend it effectively.
Soon after taking office, López Obrador canceled Prospera, or Thrive, a 20-year-old program that gave cash to impoverished mothers in exchange for keeping their children in school and taking them for regular medical checkups. The World Bank praised the program for its transparency and for improving socio-economic conditions.
But under the López Obrador administration’s new social program, those requirements were eliminated and cash is distributed to Mexicans regardless of income. New programs have expanded government pensions to even the wealthy, have provided apprenticeships for out-of-work youths and are paying farmers to plant trees.
López Obrador “doesn’t like anything that isn’t stamped with his brand,” said Valeria Moy, general director of the Mexican Institute for Competitiveness, an economic research institute.
“Now the assistance is cash transfers; there is no objective or goal,’’ she said. “It’s impossible to make sure the money is being spent by families to improve their conditions, to make sure they send their kids to school, instead of buying a television.”
López Obrador, who is deeply suspicious of the government and angered over corruption that plagued previous administrations, has argued his direct cash transfer programs have done more to help Mexicans than previous welfare plans.
But the new programs are reaching fewer of Mexico’s poorest families, economists argue, although the government is spending more on them.
One of the biggest blows for working families was López Obrador’s decision to scrap the full-time schools program.
More than 27,000 elementary schools had registered for the program since it started in 2007, providing 3.6 million students with hot lunches and extra academic hours and enabling parents to seek full-time employment, according to Mexico Evalúa, a research institute.
Yet the president blasted the program for corruption, without providing evidence, even though a government policy watchdog concluded that the program improved overall student performance.
Economists argue that the president has an outdated economic outlook and have criticized his administration for focusing at least $25 billion on big infrastructure projects that are not necessarily needed.
The projects drain resources, said Mariana Campos, a public spending analyst at Mexico Evalúa, and are “not necessarily what Mexico requires for its development.”
Guadarrama, whose family has had to make difficult financial sacrifices to keep their children in school, is embittered by the lack of government support.
“You ask yourself, ‘This is my government?” Guadarrama said. “‘Is this what I should expect?’”