Unformatted text preview: illion (1% of GDP) public works plan will be adopted in 2009 to promote both employment and economic growth. On a related matter, the government has responded to the crisis with measures that reduce costs of transportation, trying to maintain exports and tourism, two major drivers of employment. The impact of these measures has not been assessed yet. 93 MEXICO Labor market facts Recessions have been accompanied by a rapid deterioration of labor markets in Mexico. The Tequila crisis of 1995 and the deceleration of economic growth of 2001‐2002 both brought about increases in unemployment and in informal employment rates. The current developments show that Mexico is heading to a severe fall in output growth (GDP fell ‐8.2 percentage points y‐o‐y in the first quarter of 2009) which will be accompanied with rising unemployment and informality. Monthly data on unemployment records 5.3 percent for the month of February 2009. This is the highest mark since the third quarter of 1996, when the Mexican economy was getting out of the Tequila crisis. The rate for April was 5.26, still higher than the rate for any month during the last five years (see Figure 22). Mexico Labor Market Indicators (2006‐2009) Figure 21 Figure 22 activity rate unemployment rate
6.00 62 5.25 60 percentage of active labor force percentage of working age population 5.00 58 57.77 4.00 3.00 2.00 56 unemployment rate activity rate 1.00 12 per. Mov. Avg. (activity rate) 12 per. Mov. Avg. (unemployment rate)
2009 month month Figure 23 2008 2006 2009 2008 2007 2006 2007 0.00 54 Figure 24 Earnings Net Job Creation/Destruction (year-to-year)
1600 105 index (2003=100) 1200 400 100 95 90 2009 2008 2007 2006 0 2005 thousands of workers 800 -400 85
-800 non-salaried workers 2009 Jul 2008 Jul 2007 Jul 80 2006 salaried workers
-1600 earnings in retail commerce (seasonally adjusted) wages f or blue collar workers in manufacturing (seasonally adjusted) quarter As another indicator of the dearth of jobs, the activity rate has also been declining and reached 57.3 percent of the working age population in March 2007. This is the lowest activity rate in three years. By the fourth quarter of 2008, Mexico’s total employment fell by nearly 750,000 workers with respect to the fourth quarter of 2007. Interestingly, salaried employment grew by 530,000 workers for the same 94 period, whereas self‐employment, employers and non‐salaried workers declined by 1.28 million. Figure 23 shows that year 2008 recorded the highest destruction of self‐employment of the last five years. The impact of the crisis is felt not only in loss of employment, but in falling wages as well. On the one hand, wages are declining in sectors such as commerce. On the other hand, wages have remained stable in the sectors that showed a sharp reduction in employment, such as manufacturing (see Figure 24) Recent Labor Market Policies The Mexican economy has had both active and passive labor market programs in place for several years. However, the country is the member of the OECD with the lowest expenditure in labor policies as a percentage of GDP. As a re...
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