Labor Markets in Latin America: Combining Social Protection with Market Flexibility

By Sebastian Edwards; Nora Lustig Claudia | Go to book overview

recent social security reform (which will go into effect in 1997) was to reduce the cost-benefit gap.11

This chapter first presents an overview of the main characteristics of the Mexican labor market, then includes an analysis of the main regulations currently in effect concerning labor and social security: minimum wages, severance rules, medical services, and old age pensions. Finally, conclusions and recommendations are presented.


Overview of the Labor Market in Mexico

This section describes the current labor market conditions in Mexico, as well as of the recent evolution of the urban labor market. This overview is based on 1995 data from the Encuesta Nacional de Empleo (ENE), the national employment survey, and several years from the Encuesta Nacional de Empleo Urbano (ENEU), the national urban employment survey.

According to the 1995 national employment survey (ENE95), the total population of Mexico was 90.1 million inhabitants, divided in almost equal parts between men (49.1 percent) and women (50.9 percent). The population was also fairly well balanced between more urbanized areas (MUA, 100,000 or more inhabitants), with 44.5 percent, and less urbanized areas (LUA, less than 100,000 inhabitants) with 55.5 percent.12 Of this total, the working age population (WAP), that is, the population 12 years old and older, represented 71.0 percent (63.9 million). This percentage has been increasing owing to the falling rate of fertility in recent decades.13

The economically active population (EAP) is defined as the sum of the employed population and the open unemployed population. The employed population consists of those who had worked at least one hour in

____________________
11
The analysis elaborated by the Mexican Institute of Social Security ( IMSS, 1995) as a prelude to the social security reform underlines in some of its sections the disconnection between costs and benefits in various branches of social insurance.
12
Employment surveys in Mexico divide the population according to residence in MUA or LUA. This division contrasts with the more conventional one between urban and rural areas, which has a dividing line of 2,500 inhabitants.
13
The population 12 years old or older is considered, for statistical purposes, as the WAP in spite of the fact that, legally, the minimum working age is 14 years (with restrictions up until 16 years) and the Social Security Law, the Ley de Seguro Social (LSS), gives workers over 65 (who have worked for more than ten years) the right to a pension. The population of 16- to 54 year-olds was 53.3 million, or 59.1 percent of the total.

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