During the most critical months due to the health emergency, salaried work reached between 68 and 70% of the workforce, but this was due to the loss of jobs with other characteristics, especially the reduction of employment in the informal sector.
The growth of the indicator in September was largely influenced by the increase in the population with a subordinate job, which added just over half a million people to an occupation; this was the only line with a positive balance.
“It has to do with the very accelerated recovery of economic activity that was observed in the third quarter of this year, and this recovery explains why we see these data”states Janneth Quirozdirector of Economic, Exchange and Stock Market Analysis of Monex.
With the behavior of September, wage earners in the country amounted to 39.6 million peopleof every 10 subordinate jobs that were created, eight were with the guarantee of a salary in exchange for the activities performed.
From Janneth Quiroz’s perspective, the strengthening of this working condition is a sign that the labor market is still strong and robust. “The recovery is in line with the data we see for the Gross Domestic Product (GDP)”.
According to the International Labor Organization (ILO) The level of salaried work that a country has determines part of the coverage that the workforce has around some provisions, for example, the minimum wage.
In developed economies, according to the organization’s estimates, paid work covers about 90% of the employed population, but in developing countries that proportion drops to 30 percent.
However, Although salaried work has performed well in the last two months, in almost 20 years the indicator has made slow progress, from 2005 to date.the growth is barely eight percentage points.
INFORMALITY STILL PRESENT
One of the structural failures that affects the low level of salaried employment is labor informality. Although formal work has shown strength in recent months, Informality still covers 54% of the country’s employed population.
“Jobs without social security have reduced very little in proportion: less than 2 percentage points in six years, and in quantity there are 2.7 million more employed people without access to health services and other social security protections. “The structural reality of jobs without rights and without access to health services has not been substantially transformed”indicates the organization Citizen Action Against Poverty (ACFP) in a report.
The prevalence of labor informality, indicates the organization, is “result of the social insurance model provided for in the Constitution, the paradigm of economic competitiveness based on low wages and violation of labor rights, and poor economic growth”.
In labor informality, Mexico is not only far from European economies, but also distant from Latin American countries such as Uruguay, Chile, Brazil or Costa Rica.nations with lower levels of informal work.
“The structural solution is to decouple the employment condition (work) from access to health services and the vast majority of social protection coverage grouped in “social insurance” such as child stays or housing financing. “Health, care and vital income are human rights, they should not be considered and financed as labor benefits.”proposes ACFP.
With information from El Economista
Interview between Time.news Editor and Janneth Quiroz, Director of Economic, Exchange and Stock Market Analysis at Monex
Time.news Editor: Welcome, Janneth. It’s a pleasure to have you with us today. Your insights on the labor market are incredibly timely, especially in light of the recent reports that show a significant increase in salaried employment.
Janneth Quiroz: Thank you for having me. It’s a pleasure to discuss these important topics, especially as we navigate the post-pandemic landscape.
Editor: The data indicates that during the health emergency, salaried work reached between 68% and 70% of the workforce. Can you explain what contributed to this shift, particularly in terms of informal employment?
Janneth: Certainly. The sharp increase in salaried positions during this time was primarily due to a significant decline in informal employment. As many informal jobs were lost during the pandemic, workers transitioned to formal salaried positions. This was critical to providing workers with better job security and benefits.
Editor: The report also mentions a growth of over half a million new subordinate jobs in September alone. What does this tell us about the current labor market recovery?
Janneth: This growth is remarkable and reflects a very accelerated recovery in economic activity, particularly in the third quarter of the year. The labor market is indeed showing signs of robust strength, as evidenced by these new salaried positions. It’s a positive indicator that the economy is starting to bounce back.
Editor: You mention the labor market’s strength, in conjunction with GDP growth. Could you elaborate on this correlation?
Janneth: Absolutely. The labor market generally mirrors the trends in GDP. When economic activity increases, businesses tend to hire more employees. In September, with 39.6 million wage earners, the growth we observed in subordinate jobs aligns closely with the GDP growth we have seen, signaling a healthy economy.
Editor: However, it is worth noting that while there has been growth recently, over the last two decades, the rate of salaried employment has only improved by eight percentage points. Why do you think this slow progress has persisted?
Janneth: That’s a critical observation. The slow rate of progress reveals structural issues within the labor market, chiefly the prevalence of informality. Despite recent gains in formal employment, our economy has historically struggled with a significant informal sector that diminishes the overall quality and stability of jobs available.
Editor: That brings us to the issue of labor informality. How does this informality impact the workforce and the economy as a whole?
Janneth: Informality creates challenges in providing workers with protections and benefits, such as minimum wage standards and social security. In developed countries, about 90% of the workforce has salaried positions, while in developing nations, that number can be as low as 30%. This disparity not only affects individual workers but also hinders national economic growth because informal workers tend to lack access to the same resources and opportunities as their formal counterparts.
Editor: what steps do you think should be taken to strengthen the labor market and reduce informality?
Janneth: To strengthen the labor market, we need to focus on creating policies that encourage businesses to formalize their practices. This could include financial incentives or simplified processes for transitioning to formal employment. Education and vocational training are also essential, as they prepare workers to meet the demands of the evolving job market. fostering an environment that supports both employers and employees will be key to reducing informality and enhancing job security.
Editor: Thank you so much for your insights, Janneth. This has been a very enlightening discussion.
Janneth: Thank you for having me! It’s an important conversation, and I appreciate the opportunity to share these perspectives.