The economic benefits of digital nomads in Mexico City, but not everyone is reaping the benefits –
The wave of foreigners visiting for long periods of time generates big revenue, but causes the displacement of the usual neighbors and the hotel employees do not benefit either.
Denis Orlov, 33, shares a table with his girlfriend at a cafe in downtown Colonia Roma Norte, Mexico City. They both work quietly on their laptops while sipping their drinks. They arrived three days ago with a specific objective: to decide to move for an extended period.
“It’s our first time in Mexico and we are looking into the possibility of staying for three or four months, we are in the exploratory phase,” explains Orlov, originally from Russia, who currently lives in Berlin, Germany. So many of his acquaintances have moved in the past three years, he says, and they all recommend him. “We are looking for a sense of community, a relaxed atmosphere, an open-minded culture and a low cost of living,” adds the tourist, in English.
Orlov does not know it, but his arrival and that of thousands of other visitors to his profile has caused unease among some neighbors. This is partly due to the fact that its purchasing power, well above the national average, aggravates already very high general inflation. Moreover, the face of the neighborhoods where they are concentrated is changing and the economic advantage, however attractive at first sight, has not benefited the lower paid workers much.
A digital marketer, Orlov has a fixed salary of 3,500 euros per month, and adds about 2,000 more, on average, thanks to additional jobs he does independently. With his total income of 5,500 euros, or about 109,300 Mexican pesos −almost 10 times more than the average Mexican salary−, he only needs to rent a large apartment in any of the richest neighborhoods in the city, those that , unlike the majority in the urban sprawl, are relatively safe, clean and offer all basic services 24 hours a day.
There’s a clear economic benefit for Orlov and other digital nomads, people who have remote jobs and can live anywhere in the world. Salaries and distribution costs in Mexico are low, which translates into a cheap cost of living. Whoever earns in dollars or euros can stretch his salary further. Certain sectors of the capital’s economy, as well as the government (due to its tax collection), also see an advantage in this. Although the tax derivative is not direct through wages as digital nomads do not pay taxes in Mexico.
Last year, the economic profit of foreigners like Orlov in restaurants and transportation and tourism services was 9.3 billion pesos, according to Airbnb estimates. The company recently signed a controversial agreement with the government of Claudia Sheinbaum to attract this new type of visitors. The discharge is equivalent to 15% of total tourism revenue, so the administration seeks to generate incentives to capture these resources year after year.
“The arrival of digital nomads, coupled with high inflation, has translated into higher housing costs for traditional residents of Mexico City,” says Héctor Magaña, economist and professor at Mexico City Business School. Monterrey Technology. Only in the Hipódromo Condesa neighborhood, one of the most popular, has the cost of rent increased to an average range of between 18,000 and 60,000 pesos per month.
Data from the National Institute of Statistics and Geography (Inegi) shows that half of Mexican workers earn less than 4,300 pesos per month, while the average salary of a resident of Mexico City is between 6,000 and 10 000 pesos a month, he said. Magana.
“If we go a little further, we see that only 2% of the working population in our country receives more than 21,300 pesos per month”, explains the specialist, “this has meant that not everyone has the means to pay rent and they had to migrate to another place in Mexico City or, in the worst case, out of town. Many have had to move away from their place of work, adding daily two-hour commutes, while others have moved to more polluted and less well-served neighborhoods.
If certain measures that could limit the arrival of digital nomads are not put in place, these increases in housing costs could spiral out of control, Magaña believes. “The state must seek to regulate that rental prices are in line with the wages received by the inhabitants of the city, so that there is a balance. And, also, to be very clear about the spaces that are going to be available, to avoid an oversupply that leaves people who don’t have the resources to be able to occupy that house without space.
The question of housing is only one of the sensitive points of this controversy. Within the union of restaurateurs and bar and club owners there is deep division over how to deal with these rapid changes in their clientele. Recently, the owner of a sandwich shop in Condesa announced on social media that she would not serve her buyers in English, as many have begun to “demand”, she assured. The post quickly went viral, sparking a debate about the rights and obligations of this new international community in the country. (The reaction in the networks was such that the user deleted the publication).
Joosef Ayoub, who runs several restaurants and clubs in Colonia Roma Norte, including La Zaranda, Café Paraíso and Leonor, approached this new face of the neighborhood with the opposite strategy. Now, in line with company policy, Ayoub is looking for employees with a minimum of 60% knowledge of English. On average, foreign diners consume 12% more, while those who frequent clubs spend 20% more than Mexicans, shares the businessman. “For us, it went pretty well,” says Ayoub.
This was not reflected in tips to servers, says Isaac Martínez, a partner at restaurants in Condesa and Rome such as Ciena and Meroma, among others. “The service part didn’t take advantage of it,” the businessman explains, “you would think that because they are foreigners they would leave a tip of 15% or more, maybe 20%, but that’s not the case. that’s not what we saw.” A waiter in Mexico City earns, on average, between 3,800 and 7,300 per month without tipping, according to the Chamber of Commerce, Services and Small Tourism of Mexico City (Canacope). Tipping Mexican waiters makes a huge difference in their purchasing power.
Orlev himself, on his third day in Mexico, shares that he paid a 10% tip. “I do it because it’s expected behavior, but expecting a tip corrupts the economy,” says Orlev, “it allows employers to underpay their employees because they know they will getting big tips and that’s not good.”
Ayoub says Europeans and Americans, who make up the majority of the city’s digital nomads, have different tipping policies. Americans tend to leave around 20%, as their low-wage culture is similar to that of Mexico, while European visitors are used to optional tips.
“An increase in the ticket per person makes people tip a little more, even if it is not the indicator that I would like, because I sincerely wish that all my collaborators do much better”, says Ayoub, referring to the waiters who work in their restaurants. “But here was also born the philosophy that you have to develop as an employee to learn more. Normally your job was to come and serve and have a good time. Now it’s also studying English or another language to have this connection with the person who comes to visit you and leave you with a little more money”, explains the businessman.
This could be just the start of a global trend driven by telecommuting, and governments like Costa Rica and Greece are creating laws and regulations to welcome this new type of visitor who is more than a tourist but not a tourist. is not a permanent resident. . A study by consulting platform MBO Partners found that there were 15.5 million US digital nomads in 2021, an increase of 42% from 2020 and 112% from 2019. In the survey , MBO asked Americans who are not currently digital nomads if they plan to become a digital nomad in the next two to three years and 24 million said yes.
Magaña, Ayoub and Martínez agree on a common thread: the promotion by the government of the city as a destination for this new type of visitor must be accompanied by clear rules that protect the inhabitants, in addition to offering the same security and the same services in the settlements that tourists do not usually attract.
“There is no awareness of the long-term effects, of the displacement, of the responsibility that must accompany these movements,” says Martínez. “It could be a missed opportunity if there is no strengthening of the local, promotion of the roots, valorization of the people who have always been there”, adds the businessman.
Ayoub, for his part, hopes to propel the capital as one of the best known for its gastronomic and entertainment offer. “We have to position ourselves and become a much bigger city,” he enthused, “than the club nights like in Berlin and the restaurants like in Paris or New York. There is always a backhand theme among Mexicans who say “it’s that we should fight more for our country”. Charnel is a step back. To fight for one’s country is to open up to whatever is coming and to carry the name of Mexico”.
Source: El País
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