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Mexico's new president inherits healthy job market, but must redistribute wealth

Mexico's new president inherits healthy job market, but must redistribute wealth

As a man who touts creating jobs as the cure-all for Mexico's ills, President Felipe Calderon couldn't be taking office at a better time.
The economy is projected to expand by as much as 4.8 percent by year's end _ its fastest growth in six years _ thanks to exploding business in the construction, automobile and service industries. High oil prices have poured money into government coffers, the peso has remained stable and Mexico is on track to create 1 million jobs this year.
That makes things much easier for Calderon, who took office Friday promising to build an economy that creates enough jobs so that millions of Mexicans don't have to cross into the United States.
"Mexico has all it needs to be a country that receives investment and generates employment for its people," Calderon said, voicing optimism in his inaugural address as president.
The vast divide between rich and poor has fed the social tensions that have rippled across Mexico since Calderon won the July 2 election by less than 1 percent.
Losing candidate Andres Manuel Lopez Obrador, who champions himself as the "savior of the poor," claims the election was tainted by fraud and government meddling. The leftist has sworn himself in as Mexico's "legitimate" president and has set up a parallel government aimed at impeding the conservative Calderon throughout his six-year term.
Calderon has tried to reach out to the millions who didn't vote for him, vowing to alleviate poverty by giving Mexicans "dignified work" and describing job creation as "the only effective path to fighting poverty."
It's almost exactly what President Vicente Fox said when he took office in 2000 promising to create 700,000 jobs a year _ a goal reached only once, this year. Fox also fell far short of his economic growth promises as Mexico trailed many other Latin American countries during his term.
Calderon called on his Cabinet to encourage homegrown, small and medium businesses, saying Mexico's internal market must be the "motor" of the economy. He also vowed to cut government costs _ including his own salary _ to increase competitiveness, attract investment and create high-paying jobs.
"Migration continues to divide our families," he said Friday. "Instead of leaving to work in the United States, I want to look for investment here in Mexico for our workers."
According to government figures, the number of formal, private sector jobs is up by 943,000 so far this year.
Many of those jobs, however, are temporary.
Jose Cruz, a construction worker, said he only makes $10 a day and often goes months between jobs. Cruz, 30, said the only thing that has trickled down from the country's booming construction industry is discarded materials from pricey condo projects popping up across Mexico City. He has used the materials to construct a shack where he lives beneath a bridge.
"I only make enough to eat," he said.
While the Fox administration simplified some bureaucracy, opening a small business still involves copious paperwork and often bribery. Mexico's key industries are locked up by business moguls that include at least 10 billionaires, led by Carlos Slim, the world's third-richest man.
Critics say Calderon's Cabinet appointments are unlikely to provide the poor with real opportunities. His economic team is stacked with former government technocrats, some with direct ties to big business.
"These names are a mistake and are exactly what the people expected from him," said Jose Guadalupe Acosta, secretary-general of Lopez Obrador's Democratic Revolution Party.
Calderon's communications and transportation secretary, Luis Tellez, is the former CEO of Desc SA, one of Mexico's largest companies with nearly US$2 billion (euro1.5 billion) in sales. The industrial conglomerate has businesses in the auto parts, chemicals, food production, brand management and real estate sectors.
Tellez currently is the managing director for the Mexican operations of the Washington-based global equity firm Carlyle Group.
Labor Secretary Javier Lozano is the former president of the Federal Telecommunications Commission, which has done little to rein in some of the world's highest phone rates. He also is a former lawyer for Grupo Alfa, a US$6 billion (euro4.5 billion) conglomerate with businesses in the petrochemical, frozen food, automobile and telecommunications sectors.
"These people have only deepened the economic model in past administrations that has led to more poverty," said Hector de la Cueva, coordinator of the nonprofit Center of Labor Research in Mexico City.
"In Mexico, the wealth is enormously concentrated in only a few hands, which has led to this social polarization," de la Cueva said. "The problem is, the government with one hand combats poverty with social programs while with the other hand it creates more poor by favoring these monopolies."
Calderon will be aided by the fact his National Action Party has the largest bloc _ though not a majority _ in the recently elected Congress as he tries to win tax, labor and energy reforms meant to accelerate the Mexican economy.
Fox faced a hostile opposition-led Congress that blocked such reforms aimed at allowing more private investment in the state-run energy sector, cracking down on tax evaders and trimming workers' rights so that businesses can better compete.
Mexico needs booming job creation to raise the demand for labor _ and wages. The minimum wages is about US$4.50 (euro3.40) a day, and the average worker makes about 2.5 times that.
Millions of Mexicans eke out a living in the informal sector, working as maids, street vendors or in other jobs paid under the table.
Even the largest business interests acknowledge the problems of Mexico's vast inequality.
"There is no doubt that fighting poverty isn't just an ethical, moral and social obligation, but it is also an economic need," Slim said at an October business conference.


Updated : 2021-10-26 05:20 GMT+08:00