The Debt the Government Does Not Want to Recognize

By Saul Escobar Toledo
MEXICO CITY, Sep 11 2020 – The national occupation and employment survey prepared by INEGI, with figures updated to July 2020, shows an improvement that has occurred in the last two months. However, the employment situation, compared with the data existing before the pandemic still shows serious problems:

Saul Escobar Toledo

Of the 12 million who left the labor market since the beginning of April, 7.2 have already returned; the other 4,800,000 declared they needed a job, but they are not looking for one. In addition, another important portion of the workforce became part of the people characterized as ” absent with a labor link “, that is, those workers who did not attend their work centers but were not fired. It is not known if all of them have been paid their full wages and benefits and, above all, if these millions of absent will someday return to labor or will be laid off permanently.

INEGI registered an employed population of almost 50 million people (49.8) ; It should be noted, however, that the increase between June and July corresponded to the male gender, with an increase of 2.2 million people at the same time as there was a reduction of 750 thousand women .

Throughout these months, one of the sectors hardest hit has been that of the self – employed: 20% of them remained inactive in April; 16% in May; 10% in June and only 2% in July. Unpaid employees (which only receive tips or payments in kind) were also severely affected: 21% did not work in April, but in July were almost all toiling.

If we measure the phenomenon taking into account the informal workers ( who work on their own account or in the service of an employer), the figures are more dramatic: in April 10 million stopped working, in May 8, in June 5, in July still 3 million . If we accumulate all these figures, it gives us a total of 26 million, which would give an idea of the days / worker lost in recent months and the income that was not received. Some lost only a month, others two or three, and still in July many did not receive any income at all. The paralysis has affected mainly the female gender, but the number of victims is impressive.

Meanwhile, the rate of open unemployment was 5.4% in July, which yields a figure of 2.8 million persons. Here again, the rate is higher in women than in men (6.3% vs. 4.8%). By age, those most affected have been those between 24 and 44 years old, which represent more than 50% of the total. It must be emphasized that this rate has increased, not decreased, as it accounted for 4.7% in April.

Even more serious, the underemployment rate, although it fell in July compared to the previous month, is still 18.4%. This represents an increase of 3.21 times in April; 3.78 in May; 2.75 in June and 2.45 in July compared to the historical average prior to the pandemic. This means that new occupations have become more precarious, insecure s, worse paid and surely very poorly protected.

In short, we have several problems. The damage caused by economic paralysis and the pandemic : 1) affected formal workers who were laid off and have not found another job; or have not attended to their workplace and are living in uncertainty; or they have sought refuge in underemployment (and have lost income and benefits) . And 2) self – employed and informal workers who have had no income during several or all these months.

All this damage is a fact, has already happened but so far nothing has been done to restore it. As anyone can see, it is a large social debt. The repair of this immense gap in the economy of Mexican families cannot be solved with the social programs that were already planned. It is not possible to support an entire family with the elderly pension, or with student grants.

For example, the pension program for the elderly, which has the more substantial budget and covers a larger number of people. The amount of money delivered is not only insufficient today (around 600 dollars per older adult between January and June 2020, that is 100 dollars per month according to the Second Presidential Report).

Undoubtedly, the damage caused, the income that has not been replaced, will lead to an increase in poverty (between March and May the number of poor increased from 36 to 55% according to CONEVAL). The inequality also has increased. According to some studies, the wage bill suffered a drop of between 6.6 and 13.8% in the second quarter of the year calculated annually. This has resulted, naturally, in a reduction of consumption of around 20% (annually comparison, even with the rise in June and July).

A country with greater poverty and more inequality cannot be a desirable outcome for a government that has set out exactly the opposite. Above all, because in the face of these phenomena, the government has not proposed any special action.

On the other hand, the decrease in the family´s income points to a slower economic recovery due to the fall in purchasing power. The increase in minimum and contractual wages have not been able to remedy these losses and surely will not do so in the remainder of the year due to the magnitude of the economic slowdown.

The 2021 budget represents an opportunity to make up for something that Mexican families have lost; to prevent further impoverishment and to stimulate faster economic recovery. It has been argued, by the president of the republic, that a growth in government debt may be detrimental to an indeterminate tomorrow. However, the government do not want to recognize that the Mexican state has already contracted a huge debt with millions of families who have lost their income since March. Finding a formula to pay this social debt and at the same time avoid a financial crisis in the future is not impossible, nor is it a dead-end dilemma.

At the same time, the possibility of a progressive fiscal reform that serves to pay off this social debt and for a more vigorous economic reactivation cannot be ruled out for political reasons (the 2021 elections or the fear of a negative reaction from a privileged sector ) . The most surprising is that the government announced a reform of the pension system that precisely proposes an increase in employer contributions and requires increased public spending. This equates to an increase in taxes and an increase in the federal government debt. How, then, do you refuse to charge a greater tribute to the richest and most prosperous, and at the same time propose a scheme to favor big business (the companies that manage the pensions)?

A further reduction in public spending and investment (what they now call austerity) can only have the result that, once again, the cost of the crisis will be borne by the vast majority of the population. Its consequences would be equally negative for recovery of production, consumption, and prosperity of the country.

The government must face the most important question of all: give Mexicans the opportunity to overcome this crisis with the least possible losses. If they do not, all the architecture of the promised change will become fragile and maybe a mere rhetorical exercise.

 


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Q&A: Land Restoration can Help Restore Post-COVID-19 Economy

Degraded farmland is being restored in Mahbubnagar district of Telangana state in India. Investing in sustainable land management and reversing land degradation will help build economies post-COVID-19 and help poor people increase their incomes. Credit: Stella Paul/IPS

Degraded farmland is being restored in Mahbubnagar district of Telangana state in India. Investing in sustainable land management and reversing land degradation will help build economies post-COVID-19 and help poor people increase their incomes. Credit: Stella Paul/IPS

By Stella Paul
HYDERABAD, India , Sep 11 2020 – Investing in sustainable land management and land restoration will help build economies post-COVID-19 and help poor people increase their incomes as the destruction of global food chains by the pandemic provides a chance for ensuring diversity in production through ensuring the inclusion of local producers.

It also provides an opportunity to repurpose incentives for subsidies so that they deliver more common benefits for everybody without impacting the bottom line for the farmers, says Louise Baker the Managing Director of the Global Mechanism of the United Nations Convention to Combat Desertification (UNCCD). Baker is the first woman to hold the position in the U.N. agency and was appointed by UNCCD’s Executive Secretary Ibrahim Thiaw in June.

Originally from England,. Baker joined the UNCCD secretariat in 2011 and had been serving as Chief of the External Relations, Policy and Advocacy unit since 2014.

In an interview with IPS, Baker talks about the current global status of land restoration and identifies the areas where more work is needed. She also candidly shares her own vision of a future where sustainable land management is considered a new normal and used widely by nations across the world to create employment and gender equity and to improve the quality of life of the poor. Excerpts of the interview follow.

Louise Baker Managing Director of the Global Mechanism of the United Nations Convention to Combat Desertification (UNCCD).

IPS:  How does it feel to be the first woman MD of Global Mechanism and what excites you about your new role?

Louise Baker (LB): It is exciting for me to move over to Global Mechanism.

I think, what’s interesting about my role is putting policy into action. If the countries use the policy, start writing projects, start doing it on the ground – kind of making it happen, then it feels like there is a momentum behind the work of UNCCD now and there is a sense of direction. So, I am excited that all the work I have been doing in policy, now I can see it on the ground, transforming people’s lives.

IPS: In the next 10 years, what would you like to change or like to see changed?

LB: I would see the cross-sectoral nature of land being taken seriously, not just in silos that says “this is an environmental issue or agricultural issue”, because it’s not. Its culture, agriculture, its land, its water, urban development, rural development, women …so I think it should find its place like climate does – find its place in multiple sectors. People need a more holistic approach. So, I would like to see that.

I would like a conversation around what we spend on issues that impact the land. We spend a lot, globally, on incentives in agricultural sector. We sponsor fertilisers, we sponsor pesticide, we provide inputs in the agriculture.  I think there is an opportunity to repurpose those incentives, those subsides so that they deliver more common benefits for everybody without impacting the bottom line for the farmers.

I would like to see – flagships. I would like to see things like the Great Green Wall of Africa. I would like to see the Ganges rehabilitated, I would like to see things that rub people’s imagination, I would like to see people inspired to do something about this.

I would also like to see, in terms of access to financing, the least developed countries getting a bigger share of the financing.

IPS: How can least-developed countries get enough financing?

LB: You quite often see the big financing processes – the countries that are able to write fabulous proposals, get the lion’s share of the money from the international processes. And those countries that are without the in-house capacity to wade through the difficult proposal writing processes, often don’t get the money they need. So, the people who are the least able to write the proposals are the ones who need it. An international effort to start the pipeline of bankable projects for countries who need it the most would be important and I think that goes across the private sector.

The public sector has got quite a high standard in terms of what it demands for financing – all these requirements and then you need to make a profit. So, it gets even more complicated to get incentivise, de-risk and get a pipeline of projects particularly in vulnerable communities for the private sector to take a risk on. So, I think ensuring the quality of those proposals and building the capacity of people to get those proposals in would be really important.

IPS: What is reverse land degradation and build back better? How can this help restore the economy impacted by the pandemic?

LB: In terms of the post-COVID-19 world, I think its critical that we do build back better. People who are most affected by COVID-19 – people who are in most precarious situations, people who don’t have fixed term jobs, don’t get a salary at the end of the month to get what they need and rely on natural resources to pay for what they need. There’s an opportunity I think for the first time in  terms of the incentives plans to build the economy back, to invest in these natural resource base, to invest in many countries for the survival of the poor people so they can increase incrementally their incomes.

It means things like value chains which were destructed during COVID-19 are shorter. You can work with local producers. Global value chains often cut out local producers, so you want to ensure diversity in your production, you want to ensure, for example, it’s not a value chain that is just producing food for export and there is no local production of food.

Q: What kind of returns can come from investing in sustainable land management and reverse land degradation?

LB: It’s very site-specific. In general, if you invest a dollar, the economic return is between $5 to $10 in the restoration economy. And that’s across the board, so it’s an average number.

But actually there are economic benefits in terms of the eco-system services provided: if you sustainably manage the land in a dryland area, you will get more water and therefore your crops will grow better and therefore you will not suffer from dried crops so much.

There is an economic benefit in terms of new value chains, that you can now grow crops in certain areas where you couldn’t before. And if you are smart about it then there are green products that you can sell to new value chains, local or international. For example, food like Moringa and Baobab are now considered “super foods” in many countries. And so, you can create a market and high-income jobs as you go down the chain. So, there’s marketing, packaging, design, production – it’s all tied onto the natural base. So, there is a return in the investment into the eco-system services. The big win is if you can leverage that into an economic opportunity that creates more jobs, creates different types of jobs.

IPS: How can land restoration empower the youth or contribute to gender equity?

LB: Young people are really enthusiastic about changing the world and they have got brilliant ideas to change the world but they need to be given the space to do it and the space isn’t necessarily being a farmer or what their grandparents did. They need to have their creativity, they need to bring in new technologies, new innovations like drip irrigation, drone technology, planting by drones, designs for groundwater recharge. new ways to working their new models. And I think that needs to be encouraged as well. In terms of gender, women hold valuable knowledge on land use and management, especially in the rural areas.

Therefore, using gender‐specific ways of documenting and preserving women’s knowledge should be central to sustainable management and restoration efforts. Increasing women’s presence in decision-making will play a pivotal role in closing the gender gap in land ownership and management and help create a land degradation neutral world that is gender responsive.

IPS: What is the global status of the promises made by the nations in the last UNCCD COP on land neutrality?

LB: Numbers or countries committing are still quite high. Barbados joined last week. And so, Barbados is committed to set up its target. Globally if you add up the other programmes’ voluntary contributions it’s a lot of land the countries have committed to move into sustainable management.  I think there’s still some work to do on the targets to identify geographically where the work will happen, and there’s quite a lot to do to ensure the benefits of land restoration is enjoyed by all segments of  society.

We are quite excited to work around gender. We have seen some very generous funding from the Canadians to work on mainstreaming gender into our work. So, I think there’s progress definitely, but there’s still a way to go.

The big challenge is – and we have spoken about capacity building in proposal writing – translating the targets into bankable projects. It’s a work that’s ongoing. A couple of countries -Armenia and Turkey – have actually gone through the process for some adaptation funding by GEF.

IPS: Women are disproportionately affected by climate change yet underrepresented at the decision-making table. Can your appointment be looked at a part of the growing trend of change the picture?

LB: The credit of my appointment goes to Ibrahim Thiaw – the Executive Secretary of UNCCD who has also recently appointed Tina Birmpili of Greece as the next Deputy Executive Secretary of UNCCD. I don’t think we are appointed because we are female, but of course I see this as an opportunity to do more work and contribute more to building of the momentum that UNCCD now has.