OECD: Mexico maintains one of the highest levels of poverty and inequality

The Organization for Economic Cooperation and Development (OECD) warned this Tuesday that Mexico maintains one of the highest levels of poverty and inequality in the group, made up of 38 countries, including Chili, Colombia and Costa Rica.

In its annual report on structural reforms, the OECD reported that Mexico has a poverty gap index of 34.2, above the average of 28.7 for the rest of the organization’s countries.

While the Gini index, which measures income inequality from 0 to 100, is 42 in Mexico, 10 points above the agency’s average.

“Mexico has one of the highest levels of poverty and inequality of OECD income, which calls for continuing efforts and strengthening social protection, notably to make it more efficient and responsive to economic cycles, reduce gender gaps and improve education”the report noted.

The OECD recommended establishing a federal unemployment insurance scheme, a network of childcare centers with priority for low-income households, and programs to reintegrate students who dropped out during the Covid-19 pandemic into schools.

The report mentioned that the pandemic “it had a strong impact” Mexico’s educational system and expanded pre-existing inequalities.

In addition, he highlighted that women’s labor participation is still lagging despite the “recent progress”.

The organization warned that the “Competition is weak in key sectors of the economy and a small number of companies tend to dominate the markets”. Furthermore, he indicated that the 55% of workers are informal, “which is a cause and consequence of low productivity.”

In the climate transition section, the OECD recognized that Mexico was “pioneer” among emerging economies in mitigation and adaptation for climate change, but now “needs additional political action to achieve its emissions goals.”

“The country’s potential in the renewable sector is high, but it is unexploited and the proportion of renewables in the mix of energy sources is lower than in most OECD countries,” considered the report.

The OECD suggested broadening the base of carbon taxes and gradually increasing them to use the proceeds to support low-income households. He also called for maintaining regulations that promote renewables and private sector participation, and modernizing the electrical grid with smart technology.