Main Features of the Mexican Reforms

There are some core features that can be highlighted of the reform process. First, the decline of the centrality of the social insurance system for welfare provision. Barba (2006) described the Mexican social insurance institutions as the main articulation mechanism between the ISI model, the corporatist pact of the state and the industrialising coalition, and the breadwinner system. So, as Barrientos (2004) points out, when the ISI model was dismissed throughout Latin America, social insurance lost its support, especially from the state and employers; at the same time the group that could have supported social insurance, namely organised urban formal sector workers, was diminishing in number and power due to economic liberalisation polices. Indeed, the informal economy has been increasing; data from official government surveys show that the percentage of workers with access to social insurance out of the total salaried subordinated population, which is the population who should be insured by law, fell from 56 percent at the end of 2000 to 52 percent in December of 2010 (INEGI, 2011b); and coverage percentage out the total population by the private sector workers’ social insurance system, which increased steadily since the its creation in the 1940s, picked in 1990 at 47.5 percent, then stalled and in 2010 it remained at the same level (46.6%).

A second feature of the social policy shift has been the growth of social assistance programmes for poor families with no social insurance. Social programmes mainly aimed at combating poverty have always been part of the Mexican welfare system, especially after the 1960s, when an expansion of the system was attempted in response to several political crises, but those programmes changed constantly and many of them would be eventually cancelled as part of the economic structural reforms. (Barba, 2006). The new social assistance programmes vary in

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several way, they have been larger in scale and more institutionalised. The largest of these social assistance programmes is Oportunidades, but they also include Popular Health Insurance, assistance non-contributory pensions, day care centres and housing subsidies; their expansion has resulted in a steady increase of social spending since the second half of the 1990s. According to data published by the Economic Commission for Latin America and the Caribbean (CEPAL/ECLAC), social spending at the Federal level in Mexico as a percentage of GDP increased from 8.44 in 1995 to 12.5 in 2008, while per capita social spending almost doubled from 450 to 885 US dollars in the same period (CEPAL, 2011).

The centrality of the market as part of the social policy paradigm that has been deployed during the past two decades could be another of the feature of the policy shift. Oportunidades stands out for its attachment to this new market logic. As two of its creators have stated, the programme is inserted in a logic under which public policies should help poor families improve their conditions through market participation (Levy and Rodriguez, 2004). Barba (2005) identifies this logic with the shift towards productivist policies, which are in tune with the social investment logic. This relinquishment to market mechanisms in the social realm can also be observed in the pension reforms of 1997 and 2007, where private firms were put in charge of administering old- age and retirement pension funds and of the delivery of benefits, whilst pension amounts will depend on the investment decisions of those firms. Additionally, tax deductions on income tax for private health and educations spending and payment of interests on mortgage loans, can also be seen as means to subsidise private arrangements within the social sphere.

Another feature of the reforms is the emphasis on targeting mechanisms. Again the design of Oporutnidades provides the best example for this feature in Mexican social policy (Levy, 2006, Levy and Rodriguez, 2004); but the rest of the recently implemented social programmes also emphasise the focalisation on low income groups (e.g. non-contributory pensions only cover old- age adults in localities of less than 30,000 inhabitants, which are assumed to be the poorest; eligibility for day care centres is restricted to children of women living in households with an income of 1.5 minimum salaries or less; whilst the different housing subsidies also apply means- testing mechanism). The exception could be voluntary Popular Health Insurance, which attempts to expand health services with a more universalistic logic, but considering that poor families are exempted from paying their share of contributions, it could also be depicted as a programme

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targeted at poor population. One of the consequences of the targeting approach could be that, given the increase in informality, many low income families not in extreme poverty could be left unprotected because they do not qualify for the benefits but do not have access to social insurance either. (Lautier, 2001)

A new residual welfare paradigm has emerged in Mexico (Franco, 2006, Barba, 2005, Lautier, 2001, Barrientos, 2009). The development of social policy shows a shift in the design of the recently introduced policy instruments. However, the old paradigm has not been abandoned. The new paradigm coexists today with the traditional paradigm, which has not been totally dismissed. In fact, resources devoted to social insurance programmes still exceed considerably the resources spent on social assistance. These thesis aims to uncover what have been the redistributive effects of these policy changes.