Mexico | Inflation and informality, the challenges of working poverty

Summary

According to Coneval, working poverty at national level stood at 38.3% in the second quarter of 2022, maintaining a downward trend. Two factors in the short term are considered the main challenges to continue on the path of reducing poverty levels: inflation and informal employment.

Key points

• Key points:
• Working poverty remains above the pre-pandemic level of 36.6% of the first quarter of 2020).
• The monetary values of the consumption baskets that determine the Extreme Poverty Line by Income had an average annual increase in this second quarter of 12.6% and 12.0% for rural and urban areas, respectively.
• There is a significant gap between the average real monthly labor income of the formally employed population ($9,312 pesos in the last quarter) and that of the population in an informal situation ($4,524 pesos).
• The average real income of the formally employed population has had a greater recovery than that of those in the informal sector from pre-pandemic levels.
• The minimum wage recovery policy, as well as the adoption of tax incentives to increase the productivity of companies, are viable options that must be strengthened to continue reducing working poverty.

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