Mexico's Economic Picture From A Different Angle
In "President Salinas: My people are in a hurry" (International Business, Aug. 12) Salinas' claims of economic recovery were greatly overstated. The government's deficit is down, but not to 0.5% of gross national product as he asserted. According to Banco de Mexico, the deficit in 1990 was 3.8% of GNP.
The main reason for the reduced deficit in 1990 was the large increase in revenues from the regressive value-added tax. As such, the President's other substantive claim to economic improvement--the increase in wages--is called into question. Wages for "industrial workers," roughly 10% of the labor force, did increase by 5% in 1989. But escalating sales taxes probably eliminated the wage increase. (In any case, industrial wages are still at least 20% less than they were in 1980.)
Approximately 45% of the employed receive only the minimum wage. Under President Salinas, the minimum wage declined by 17%, from 1989 through mid-1990, according to Banco de Mexico. James M. Cypher
Professor of Economics
California State University
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