Pandemic weakens formal employment in Mexico

Mexico had its worst January in seven years in terms of job creation as a spike in coronavirus cases and a consequent tightening of restrictions put the brakes on the country’s economic recovery.

A net total of 47,919 formal sector jobs were added last month, according to Mexican Social Security Institute (IMSS) data, a 30.5% decline compared to January 2020.

It was the worst performance since January 2014 when only 22,000 new jobs were created. The weak job growth coincided with the worst month of the pandemic in terms of both new coronavirus cases and Covid-19 deaths. Ten states faced red light restrictions in the second half of January while Mexico City and México state, key drivers of the national economy, were red all month.

IMSS data published last week also shows there were almost 670,000 fewer formal sector jobs at the end of January compared to a year earlier. Just over 19.8 million workers were registered with IMSS on January 31, a 3.3% decline compared to the same date last year.

Millions of people lost their jobs in the formal and informal sectors in the first months of the pandemic before a jobs recovery began in the middle of last year. The Mexican economy slumped 8.5% in 2020, its worst contraction since the Great Depression.

The sectors that suffered the biggest job losses in percentage terms over the past year were business services (-9.9%), construction (-6%), mining (-5.4%) and retail (-2.4%).

Factory workers assemble hair dryer components on a manufacturing line in Ciudad Juárez.

The sectors that added the most jobs were agriculture (+0.7%), social services (+0.3%) and transformation, or advanced manufacturing (+0.1%).

Only three states had more formal sector jobs at the end of January than at the end of the same month in 2020. They were Baja California (+3%), Tabasco (2.4%) and Chihuahua (+1.4%).

Quintana Roo, which is heavily dependent on the hard hit tourism sector, suffered the biggest drop in formal sector jobs, recording a 23.2% decline in the number of people registered with IMSS between January last year and the end of the first month of 2021.

The next biggest job losses occurred in Baja California Sur (-9.9%), Guerrero (-7.7%), Puebla (-6.6%) and Mexico City (-6.3%).

Mónica Flores, Latin America president of Manpower, a staffing firm, told the newspaper El Universal that the jobs recovery in Mexico in 2021 is uncertain.

“The recovery of employment depends on a lot of variables, such as the vaccination scheme, job creation incentives and economic performance at a global level,” she said.

“The big problem that Mexico faces is informality, which it hasn’t been able to reduce in order to move people into formal work.”

Source: Banderas News