Millennials, on the path to poverty

54% of millennials work in the informal sector, which implies the lack of access to health services or benefits

Millennials, on the path to poverty
Millennials are at risk of low pensions - Photo: File Photo/EL UNIVERSAL
English 22/11/2018 14:32 Rubén Migueles Mexico City Actualizada 14:33
Guardando favorito...

Leer en español

Four out of 10 millennials, those born between 1985 and 2000, could live in poverty during their old age, as many of them work in the informal sector and have no retirement fund, warned the Mexican Association of Insurance Institutions (AMIS).

The decreasing levels of retirement savings and the increase of labor informality are the factors that will cause this generation to reach old age as part of the low and medium socioeconomic stratum and they will have to keep on working to survive, it detailed.

The number of millennials between 20 and 34 years currently working is 18.5 million people, over a third of the national total, nevertheless, almost 10 million, 54%, work in the informal sector, which implies the lack of access to health services or benefits, according to the Inegi.

Also, this generation started working after the 1997 Retirement law became effective, therefore, their pension will be lower than those who will retire under the 1973 law, says Francisco Lozano, the Insignia Life General Director.

He explains that the employees under the 1973 law could have a pension of up to MXN $60,000 per month.

In contrast, in the case of people who started working in 1997 will have an average of 40% of their salary during their last five years of work life, that is, a pension of around MXN $24,000, less than a half of those who will retire under the 1973 law, Lozano explains.

The income levels in Mexico are low. According to numbers from Inegi, 64% of millennials, 11.8 million, earn up to MXN $7,952 per month, and if the situation persists, they could retire with a maximum pension of MXN $3,181.

A long way to go. Although the projections could seem a bit adventurous, since this generation still has 20 to 35 years of work left, Lozano says it will depend on how professional work economy will develop in Mexico.

“It will have to do with, the way we see it nowadays, a group of people who are focused on having their own business, managing their schedules, but also to being entrepreneurs in the professional areas they are specialized in,” Lozano said.

Nevertheless, currently, the number of millennials who are entrepreneurs and employ others is 442,000, only 2%; in contrast with the 14.8 million subordinated and paid employees, which is 80% of the millennial workforce.

In the face of this alarming situation, the workers between 20 and 34 years of age could, although independent or subordinate, can make voluntary contributions to their retirement funds, to the Afore and to insurance companies, in order to generate an accumulation in time and increase their pension, Lozano said.

This will depend on the millennials savings capacity and forethought throughout their work life, nevertheless, if they stay in informal employment and with low wages, this generation and the next ones will be at risk of being poor during a large part of their old age.


Guardando favorito...

Noticias según tus intereses

El Universal

Las Indispensables

Termina tu día bien informado con las notas más relevantes con este newsletter

Al registrarme acepto los términos y condiciones