INEGI: Unemployment Falls; Informal Sector Grows

Boosted by end of the year economic activity, Mexico’s unemployment fell to 3.9 percent from last year’s 4.7 percent, when the global economy was still in the grips of a second COVID-19 wave, informed the National Institute of Statistics and Geography (INEGI) in its annual report.

“Of the [Economically Available Population] EAP, 56.4 million people (96.1 percent) were employed in the tenth month of 2021, an amount that increased by 3.6 million people in its annual comparison” reads the report.

With this development, Mexico’s unemployment rate is hovering just above its pre-pandemic rate of 3.4 percent, a seemingly positive indicator. This growth, however, is being buoyed by informal employment, which is highly vulnerable to seasonal changes and market shocks. In other words, come January some of the 31.3 million people within this sector could once again find themselves unemployed. This is withholding the inclusion of the 6.2 million people who have declared themselves underemployed, which represent 11 percent of the employment workforce.

The employed labor force has been absorbed mainly by the following industry sectors: services with 42.9 percent, commerce with 19.8 percent, manufacturing with 15.9 percent, agricultural activities with 12.4 percent and construction with 7.6 percent. Other economic activities, representing various industries, employed about 0.7 percent of the workforce. Of the total workforce, 67.3 percent operate as a subordinate paid laborer while about 23 percent of the labor force work as independents or without an official contract.

Notably, this assimilation has not been even across states. While some have surpassed pre-pandemic employment levels, others have struggled. Hidalgo, for example, has yet to bridge a 1.7 employment deficit but other entities have experienced rapid growth, including Quintana Roo with 3.4 percent and Baja California Sur with 3.1 percent, both presumably getting a boost from renewed tourism rates. Mexico City, which has continued to create more employment opportunities over the past four months, witnessed employment rate grow by 2.3 percent.  

Overall, Mexico’s shrinking unemployment rate is positive indicator that is presumably supported by an impressive macro-economic rebound, as the country is expected to finish the year with 6.2 economic growth. What remains unclear is if the economy will be able to retain its labor force into the next year after the seasonal chill that follows at the conclusion of festivities.