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Mexico: A Safer Place for Employment

19 August 2010 No Comment

The global financial crisis of 2008-2009 has had a significant impact in all countries and, in particular, most levels of economic growth and employment have been significantly affected.

In the case of Mexico, given the close commercial link with the U.S. due to NAFTA, the effects of the mortgage crisis resulted in a lower level of exports and employment. The commercial link between the two countries is so great that the contraction of the U.S. economy impacted an economic decrease for Mexico by 6.5 per cent. This contraction rate has not been seen since 1932, and it is the result of both the contraction of imports, consumption and tourism, and the dramatic rise in inflation. Mexico’s growth decline was the third highest in a comparative list of more than 180 countries.

However, when we look at employment figures, surprisingly, Mexico has had quite a reasonable behavior. In 2009, employment in Mexico behaved significantly better than in most OECD countries. The Mexican economy observed an unemployment rate of 5.5 per cent in 2009, while the OECD average was 8.3 per cent. Only five of the OECD countries (Netherlands, Korea, Switzerland, Austria and Japan) had unemployment rates lower than Mexico. Obviously, when comparing ourselves with the emerging BRIC countries, only China, with a 4.2 per cent rate, has a marginally lower level of unemployment.

Mexico has been through several financial crises in the last decades, and though this last global one has been by far, the greatest since the great Depression of 1930, it is the one that has least impacted our employment level. While the economy shrank by 6.5 per cent, unemployment has only fallen in less than half point. Furthermore, in the case of youth employment, we can see that Mexico has been one of the countries that have dealt with this in the best manner. Even though youth unemployment rate has decreased since 2007 as a result of the financial crisis it is now at 8 per cent, compared with the world average of 13 per cent.

Moreover, if we compare with ourselves with our 90s situation, unemployment levels are lower today. In the 1995 crisis, we had an unemployment rate of 8 per cent while the general rate today is 5.5 per cent.

We should also have in mind, that Mexican migration has had a net decrease in recent years. According to INEGI figures, net migration shows a downward trend, which means that Mexico expels fewer persons from the country as time goes on. This index has declined from 5.4 people per thousand inhabitants who left the country in 2007, to 1.4 per thousand in 2010.

Fewer Mexicans leave the country, and yet employment has been relatively protected during this period of global crisis. Mexico appears to be a safer place to keep a job.

The obvious question is then, why do we perceive that the situation is tough unemployment figures are significantly lower? Why are there so many questions about whether migration is drastically reduced? What are we not seeing about employment? Acknowledging ourselves is the first step, to powerfully see what is missing and how we can make a difference.

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