Mexico's President, Andrés Manuel López Obrador, made a bold proposal on Monday to guarantee people full-wage pensions upon retirement, a move that no other country has implemented, even those wealthier than Mexico. While this announcement comes with only eight months left in López Obrador's presidency, it appears to be part of a larger strategy to attract voters for the upcoming presidential elections in June.
López Obrador's plan includes a series of 20 constitutional reforms, but it is unlikely that he will secure their passage before leaving office in September. However, these proposals could set the stage for his party's candidate, Claudia Sheinbaum, and potentially help Morena gain the two-thirds majority in Congress needed to amend the Constitution.
Some analysts believe that these reform initiatives are primarily aimed at winning votes in the election. Gabriela Siller, the director of analysis at Banco Base, remarked, 'It's an election year, so all these reform initiatives can be seen as something to get people to vote for Morena.' However, there is also speculation that López Obrador intends to shape the agenda for the next administration by setting high expectations that are costly to fulfill.
Despite the political strategy behind the proposals, López Obrador faces challenges in getting them passed through Congress. The Constitution requires a two-thirds majority vote for amendments, and opposition parties are unlikely to support his suggested changes in the limited time he has left in office. For instance, his request to transfer the National Guard's control from the law enforcement agency to the army has already been rejected by Congress.
During the announcement, López Obrador justified his measures as an attempt to 'recover holy rights, guaranteed to Mexicans by God.' The package of reforms also includes guaranteed increases in pension payments for the elderly, above-inflation minimum wage increases, and guarantees such as internet access, bans on fracking, open-pit mining, GM corn, cruelty to animals, and vaping pens.
Critics argue that López Obrador has previously made promises that have not been fulfilled. For example, he pledged to create a healthcare system better than Denmark's, but Mexico's healthcare infrastructure remains crowded and ill-equipped. The cost of his proposed pension reform is also concerning. With a workforce of approximately 60 million people, covering all of them with full-wage pensions would be a significant financial burden.
Currently, Mexico lacks a government pension program, except for some powerful unions representing government workers. Most Mexicans rely on privately-managed pension funds called Afores, to which they and their employers contribute. However, these funds only cover around half of the country's workforce with average pensions of approximately $290 per month - less than the minimum wage.
To achieve López Obrador's vision of full-wage pensions, the Afore pension fund would need to increase by 2.5 times to meet the median wage and then double again to cover informal workers. This ambitious goal seems unlikely to materialize, raising questions about the president's motivations behind the proposal.
Moreover, it is notable that López Obrador himself announced the measures instead of allowing his candidate, Claudia Sheinbaum, to make the announcement. Some analysts suggest that he is focused on solidifying his legacy rather than nurturing a strong and independent party. By shaping the direction of the next administration, López Obrador can leave a lasting imprint on Mexican politics.
Author and analyst Viri Ríos wrote in the newspaper Milenio, 'López Obrador is presenting these reforms to set the path for what he thinks Claudia Sheinbaum's administration should be.' Only time will tell if these proposed reforms will have any lasting impact on Mexican politics and the future of pension systems in the country.
