The Mexican working class is spending their retirement funds before they become pensioners . What now seems like a relief could be a serious risk for their future because if they do not replace the money, this could delay their retirement date; also, people will receive less money once they retire and their pension will be lower.
The law allows workers to use their retirement funds , known as Afore , in two cases: to pay for weddings and when the worker is unemployed . Information released by the National Commission of the Retirement Savings System shows that the disposal of Afore resources reached its peak in July. During that month, people withdrew MXN $1,204 million from their retirement funds . From January to July, the total was MXN $6,658 million, 28% more than during the same period in 2018 .
This situation stems from the current unemployment rates but also from more serious factors: the salaries paid to the majority of Mexican worker s are barely enough to satisfy their basic needs . For example, figures released by the INEGI show that over 50% of Mexicans who are employed have a maximum income of two minimum wages , around MXN $6,000 per month . With this amount, families will hardly be able to overcome poverty .
Analysts and authorities have recognized that the pensions workers will receive in 2022 , the first workers set to receive a pension following the new retirement funding scheme will be insufficient because it will only represent 30% of their salary.
The government , business leaders , and unions agree that the pension system should be reformed but if the changes are not implemented soon, the panorama for the first generation of pensioners retired under the new Afore scheme will be as desolating as their working life.
Mexico
has to create the right conditions to modify the structure of the wage percentage received by those who earn low wages. During the negotiation of the USMCA between Mexico , the U.S. , and Canada , the fact that Mexico pays really low wages was widely discussed.
It is true that the savings levels among workers are minimum but it is not surprising since they earn low wages . Modifying the salary structure won't happen overnight but it is time to act if the government wants to guarantee a decorous retirement for millions of workers .
gm