Mexico unemployment hits low, as informal economy grows

Tuesday, November 29, 2016

Mexico's unemployment fell to a seasonally-adjusted 3.6% of the economically active population (EAP) in October, a nine-year low, down from 3.8% in September and well below the 4.4% seen in October 2015, as the figure has continued a fairly steady downward trend all year.

While the rate hit its lowest level since June 2006, the figure, reported by state statistics agency (Inegi) includes a slight drop in the EAP to 59.6% from 59.9% of the population aged 15 and over in September.

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The percentage of the EAP reporting underemployment actually increased in October, climbing to 7.7% from 6.8% in September, but the figure was still lower than the 8.3% at end-October last year.

The informal economy also siphoned off jobs in October, with the rate of employment in the informal sector rising to 27.3% from 26.8% in September, but down 0.4 percentage points year-on-year.

According to the 2010 census, Mexico has 119.5mn residents, meaning that 71.2mn were working or seeking work last month.

While Mexico has seen its tax revenue improve beyond expectations, largely due to structural tax reforms, dogged informality hurts Mexico's potential revenue just as the country is making efforts to reduce worrisome public debt.

Furthermore, trade groups have raised alarms that the burden of bringing businesses into the formal economy is producing dangerous pressure on Mexico's retirement system.