Government Reports Jobless Rate above 3 Percent for January-September, but Underemployment Remains High

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The latest government statistics on unemployment report the jobless rate for September at only 3.3% of the economically active population (EAP). As of 1997, the EAP comprised 38.8 million Mexicans of working age. The September statistics, published by the government's Instituto Nacional de Estadisticas, Geografia e Informatica (INEGI), are slightly higher than the August unemployment rate of 3% of the EAP. INEGI said the September data brought the average unemployment rate for the first nine months of the year to 3.9%.

The government includes in the official employment rate EAP members who are working even a few hours a week. However, INEGI's index of part-time employment, often overshadowed by the unemployment data, offers a more accurate picture of the country's employment situation. The index (Tasa de Condiciones Criticas de Ocupacion, TCCO) measures the percentage of the EAP that is either employed less than 35 hours per week and earning less than one minimum wage or is working 48 hours per week and earning between one and two minimum wages. According to the recent INEGI report, the TCCO for January-September was 13.2% of the EAP.

But even INEGI's attempts to measure underemployment via the TCCO provide an incomplete picture of Mexico's employment situation. Some economists suggest that the TCCO rate would be much higher if INEGI modified the criteria to include workers employed more than 35 but less than 40 hours per week. Similarly, the TCCO would rise if the government counted workers who were employed 40 or more hours per week but who make the equivalent of one minimum wage.

Report says many Mexicans working in informal economy A report published in late September by Grupo Financiero Banamex-Accival (Banacci) said only 19.4 million Mexicans, or half the EAP, receive a regular salary. Another 1.94 million, roughly 5% of the EAP, are employers. The remainder of the EAP either make a living from the informal economy, work for a relative for no pay, or have no way to earn a living.

Some legislators and businesses have proposed that the government begin taxing street vendors to raise revenue. The issue has been brought to the table as part of the debate over the proposed 1999 budget, which faces some reductions because of a sharp decline in oil-export revenues and the impact of the global financial crisis.

But the Secretaria de Hacienda y Credito Publico (SHCP)

has rejected a tax on the informal economy. In a recent forum, deputy finance secretary for revenues Tomas Ruiz said the plan could cost the government about 0.22% of Mexico's annual GDP, which is more than would be obtained from imposing the new taxes.

Meanwhile, the Banacci report said the number of jobs in Mexico has risen in recent years because of growth in GDP in 1995-1997. The report said there were more jobs in Mexico in 1997 than in 1994, but the number of jobs created was insufficient to match the explosive growth in the EAP.

The government expects GDP growth to slow considerably in 1998 and 1999 because of the global financial crisis. …