Accessibility links

Study Shows Big Gap Between Rich and Poor in Mexico


A new study by the New York-based firm, Towers Perrin, shows that Mexico has one of the highest gaps in earnings between workers and business executives. The disparity in incomes has limited the ability of people to move into the middle class.

According to the Towers Perrin study, the gap between low-wage workers and the executives who run the companies where they are employed has grown in the past 16 years. Today, a white collar executive makes 124 times what a worker makes. In 1985, an executive made only 38 times what a low-level employee made.

In the United States, according to the study, executives make 27 times what workers make. In Venezuela, the figure is 75 and in Brazil, 38. The country with the lowest gap is Switzerland, where executives make only 9.5 times the salary of a basic worker.

This news comes on top of other recent surveys and studies showing the limited growth of the middle class in Mexico and the difficulty faced by workers aspiring to improve their economic lot.

Other studies show that nearly half of Mexicans live below the poverty line, with 20 percent living in extreme poverty. Around 18 percent of Mexicans are in the lower middle class, earning $400 to $500 a month and about 20 percent are classified as standard middle class, earning $750 to $2,200 a month. The wealthy and upper middle class represent about 12 percent of the population.

To make matters worse, the wealthy pay almost no tax, so the main burden of supporting the government falls on the middle classes and workers. In a country of more than 100 million people, only 7.3 million pay income taxes each year. It is estimated that each taxpayer pays for 20 other Mexican citizens who either evade taxes or who earn too little to require reporting.

Mexican President Vicente Fox's proposal to make the tax system more equitable, through a broad-based value-added tax, was set aside by the Congress late last year. The Fox government's efforts to improve the lot of Mexican workers and the struggling middle class have also been set back by the slowdown in the world economy in the past year.

Mexico is better off than most developing nations and boasts the strongest economy in Latin America at the moment. But economists and political scientists agree that until wages improve for the average worker, the middle class will not grow and the number of Mexicans seeking better opportunities by emigrating to the United States will increase.

XS
SM
MD
LG