Economics: Labor market gaps remain despite signs of recovery in formal and informal jobs
After data for the first quarter of 2021 showed job losses year over year, a recovery began during the second quarter. The main reading of formal employment in Mexico – the number of workers actively enrolled with the Mexican Social Security Institute or IMSS – had broken slightly back below pre pandemic levels, following the same trend of the quarterly labor report, although total formal employment remained half a percentage point shy of the 2020 second quarter figures. The same positive results can also be seen in total hours worked during the quarter.
But as good as those numbers appear, it is something of an overstatement to see in them a complete labor market recovery, and it is best to parse the latest reports to more thoroughly analyze the extent and, above all, the depth of the rebound, while also considering the unique ramifications of the economic contraction of 2020. That exercise begins with a recognition of a major change in the labor market starting in April 2020 in which the economically active population began to contract at a faster pace than the number of those employed.
Indicators contained in the National Survey of Occupation and Employment (ENOE) for the second quarter of 2021 suggest that the abrupt change in the EAP that has been reflected in a considerable rise in disguised unemployment as well as much higher levels of underemployment that began in the second quarter of 2020, have not decreased enough to recoup the income levels households had achieved prior to the Covid 19 crisis.
It remains unclear whether over the medium term we will witness additional job growth emerging from new investments or the reopening of businesses that have been forced to close amid the crisis. However, we are unlikely to see a considerable reactivation of domestic spending levels essential to the prospects for sustained job growth in Mexico.
Now read on...
Register to sample a report