It does not appear to be Mind Affecting. But it is a Morale Penalty which is usually associated with the ability being [Mind Affecting]. I looked briefly in the Errata and FAQ and didn't find anything addressing this.
It's not listed as Mind-affecting effect, but it doesn't work on things that are immune to morale effects, like undead. I suppose it could work so that only mindless beings are unaffected by this and rest suck up the -2 penalty.