Mexican economy continues to shed jobs

Formal labor market crashed in January, with its worst performance in five years

Guadalajara -
In December MGR reported that last year, Mexico's economy created less than a third of the jobs needed to sustain its growing work force. Sluggish labor market a victim of Mexico's economic backslide in 2013. Today the government acknowledged January employment numbers were equally dismal.

The Mexican Social Security Institute (IMSS) reported that last month just under 22,000 new jobs were created, more than 50% less than the 44,169 created in January 2013. It was the lowest employment expansion since 2009, according to IMSS.

Compared to January 2012, when the economy created 77,524 new jobs, the performance was even worse - a drop of 71.65%.

That was not the end of the bad news. IMSS also reported that the national economy lost 22,654 permanent jobs in January, more than offsetting its modest gains. The creation of formal positions with prestaciones, or legal benefits, is a prime focus of the 14 month old Institutional Revolutionary Party government of president Enrique Peña Nieto.

Last July the Peña Nieto administration announced a National Crusade Against Informal Employment. About 30 million Mexicans - almost 60% of the currently employed labor force - work in the informal economy. That's another way of saying that they are self-employed and earn a mere subsistence income. Included within their ranks are street vendors and small retailers, domestic and agriculture workers and home based businesses. Most such workers are males between the ages of 25 and 44, but many are much younger. They receive no benefits from any quarter, and enjoy none of the legal protections employed workers have. They are without an economic safety net, and they pay nothing into the national social security system - nor, generally, taxes. The government hopes to change that. Enrique Peña Nieto announces plans to get more workers on real payrolls.

The chart below, prepared by a Mexican federal agency, shows how informal positions continued to expand in 2013, despite the government's efforts to move the economy in a very different direction.

Sept. 6, 2014 - The informal labor market is Mexico's greatest economic challenge, and accounts for virtually all of those earning the minimum wage according to this analysis.
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A classic example of Mexico's informal economy - the ubiquitous fruit stand. This one was set up outside a graduation ceremony in Guadalajara, to capture new diploma holders and their families. A plastic cup filled with fresh watermelon, pineapple or the customer's choice goes for 20 pesos - $1.50 at today's exchange rate. By the time the proprietor pays for his products, and sometimes a vendor's license, his net profit is minimal. But there is no other option for most, especially in an economy which grew a mere 1.1% in 2013. 29.56 million jobs were of the informal type by last year's end.

Mar. 25, 2014 - Mexican economy off to a shaky start in 2014, January data shows
Jan. 5, 2014 - U.K. report: life is getting harder, not easier for Mexicans
Jan. 4, 2014 - Many Mexicans heavily in debt, with no way to pay
Dec. 20, 2013 - Mexican minimum wage in 2014 will be $5 dollars - a day
Aug. 24, 2013 - Mexican unemployment stats paint a bleak picture for the most well educated
July 29, 2013 - 53.3 million - that's how many Mexicans live in poverty
July 14, 2013 - Over 60% of Jaliscans earn less than subsistence income
May 23, 2013 - Mexican population is soaring, and most are young
July 29, 2012 - Yucatán has well-educated labor force, but offers one of Mexico's worst job markets
Apr. 23, 2012 - AMLO: Economic inequality is the primary cause of Mexico's insecurity

The informal labor market may present more than just economic risks - Aguascalientes, April 2013

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