Mexico has already been in “quarantine” for a considerable number of days. Civil society, in general terms, has responded to the call of Health Undersecretary Lopez-Gatell and has stayed at home, as much as possible, regardless of their socioeconomic level. Although others cannot do so because they live on a day to day basis, that is, if they don’t work, there is no food.
At this moment, the Mexican businesspeople faces a hard, complicated reality without the support of the government who, on the contrary, demands no layoffs, full wages, and taxes. There is no consideration whatsoever.
In Mexico, more than 70% of formal jobs and around 12% of informal employment are created by the private sector. For years, President López Obrador has said time and again that Mexico’s businesspeople are a “rapacious minority.” He has called them “exploiters,” “ungrateful” (to their employees) “arrogant,” “cunning and dishonest and “unscrupulous” amongst other pejoratives.
As everywhere else, it is a fact that such businesspersons exist. However, what Mr. President forgets or does not consider is that, in our country, many entrepreneurs are committed to their employees. How can they not be? Let me explain:
In Mexico, microenterprises represent 95.4% of the country’s total businesses; they have from 1 to a maximum of 10 employees, small businesses make up 3.6% of the country’s overall activities, and medium-sized companies 0.8%.
In Mexico, there are four and a half million companies that have no more than ten employees. In these companies, ’ employees live and interact every day as a family outside the immediate family nucleus. The entrepreneur knows their names, their children, where they live.
However, beyond the human side, the cold number gives us worrying indicators.
The contribution of private initiative to Mexico’s Gross Domestic Product (GDP) is around 52%, and they generate more than 70% of formal employment. However, despite their impact on GDP and employment generation, they have meager survival rates. 65% of microenterprises with up to two employees will live until the first year, and 42.6% will live only until the second year.
The same pattern is repeated for companies that have between three and five employees who will live in the first year at 71.4%, and only 54.5% will live to the second year. The trend improves for companies with between six and ten employees whose survival rate to the first year is 77.9% and 65.8% for the second year.
The micro, small, and medium enterprises in Mexico for years, have faced challenges for their growth. Traditionally, they meet three very particular situations.
-The generation of not enough cash flow for their owners or partners
-The digital transformation.
-The lack of human capital since their income is not high enough to hire specialists.
Millions of these businessmen with less than ten employees, have bet on Mexico and have no links to Lopez Obrador’s favorite enemy, the “mafia del poder.” They do not live in opulence; they do not have private planes, nor powerful godfathers in the “PRIAN”. None of these millions of employers were invited to the National Palace to eat the most expensive tamales in the world and give a contribution of 20 million pesos in a raffle for an airplane where you don’t win the plane.
These 5 million employers don’t want to fire a single one of their workers. They want to continue paying their suppliers and continue with their tax obligations. But that… will be impossible.
Yesterday, in the “mañanera” press-conference Lopez Obrador threatened the business owners of Mexico. He said he would publish a “blacklist” of those who fire employees.
In short, if the employer does not pay the full payroll, he will be sued, exposed, and blacklisted. If he or she doesn’t pay the electricity, CFE will cut it off. If they don’t pay their employer’s fees, their assets will be seized, and if they don’t pay their taxes, their accounts will be frozen.
Welcome to Mexico. Where we have a president who dislikes businesspeople and entrepreneurs. A man who has never in his life invested his capital, never created jobs, never taken human actions, nor built anything of value, in many cases from practically nothing. A president with nothing but contempt towards those who have.
José E. Urioste Palomeque
For The Yucatan Times / Times Media Mexico
April 02 2020
Merida Yucatan, Mexico
