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 Editorials | June 2005 
Government Statistics Don't Tell the Full Story
 Jonathan Clark - The Herald Mexico
| | The nation's annual low unemployment percentage is a product of the massive informal economy, experts say. |
Every morning, some 150 or so skilled tradesmen, ranging in age from their mid-20s to 60s or even 70s, take up positions on the sidewalk along the west side of Mexico City's Metropolitan Cathedral. They set down their tool kits and lay out colorful hand-painted placards reading "electrician," "bricklayer," "plumber" and "painter." The rest of their day is spent chatting and joking with each other as they wait and hope that someone will come along with an offer of work.
Francisco Herrera, a plumber from Mexico City's Ixtapalapa neighborhood, is a regular among the group.
Now in his late 40s, he has 28 years of plumbing experience under his belt. For the first 10 or so years of his career, he worked for a variety of contracting companies where he earned a regular paycheck along with benefits like social security and holiday bonuses. But he got tired of getting laid off, he says, and so he started working "independently" in the informal economy. For the past 18 years, he has worked for cash, paid no taxes, and received no benefits.
"It's really tough right now," he says, ducking under an old umbrella to hide from the burning midday sun. "A couple of years ago, I could get work four or five days a week here. But nowadays, I'm lucky to get one or two."
During a good week, Francisco says that he takes in 500 to 800 pesos (US46 to 74), barely enough to support his wife and two children still living at home. "But some weeks, I'll just get one little job, no more than a couple of hours, and make 150 or 200 pesos (US14 or 18)."
Still, even during those weeks where he might work just one or two hours for a handful of pesos, in terms of government statistics, Francisco is an employed worker. That's because, according to the paradigm used by the government's statistics-gathering agency, INEGI, any person who has worked at least one hour for monetary compensation during the previous one-week period is employed. By that standard, the man hawking pirated CDs on the Mexico City subway is also employed, as is the woman selling candy on the sidewalk or the teenager scrubbing car windshields at stoplights for spare change. Due in large part to its statistical methodology and massive informal economy, Mexico consistently registers low unemployment figures. For example, its reported rate of unemployment for 2004 was 3.8 percent. Of the 27 developed nations listed in the Organization for Economic Cooperation and Development's 2004 standardized employment rates, only South Korea, at 3.7 percent, showed a rate lower than Mexico's. Two other OECD members, the United States and Canada, counted 5.5 and 7.2 percent unemployment in 2004, respectively.
But while it is a member of the OECD, Mexico is not currently included in the organization's unemployment comparisons due to standardization conflicts. For instance, Mexico's unemployment calculations have traditionally considered all members of the work force over 12 years of age who sought work but worked less than one hour a week, while most other OECD nations use a 15- or 16-year age cutoff. Starting in 2005, however, as part of an effort to better normalize its data, INEGI has begun using 14 as its minimum workforce age. It also has added more information to its employment surveys to better differentiate those who work in the formal versus informal sectors. Even so, after using the new measurements for the first time in January 2005, Mexico's monthly unemployment rate was 4.1 percent. The United States, by comparison, had 5.2 percent unemployment during January.
COMPARING APPLES WITH ORANGES
While its measurement techniques have made comparisons with other nations difficult, INEGI's definition of "employed" is, in fact, consistent with international standards. According to the principles established by the 13th Conference of Labour Statisticians, the benchmark used by the OECD, one hour of compensated work during a one-week period can constitute employment. Erick Quesnel, board member at the Frente Autentico de Trabajo, an independent workers union, says that even as Mexico normalizes its employment measurements to meet OECD standards, it will be difficult to compare unemployment figures here with those of the United States, Canada, or European countries. "They may be measuring more or less the same thing," he says, "but the variables that surround that thing make the measurement change in a very dramatic way."
For example, he says, institutional differences make accurate employment statistics-gathering more difficult in Mexico.
"In the U.S., Canada and Europe, you have unemployment assistance and benefits, so you have a motive for establishing yourself as unemployed," he says. "But in Mexico, there's no such thing as unemployment benefits, so there's no motive to appear in the category."
So instead of obtaining its employment statistics through government agencies, INEGI relies on door-to-door surveys where there is less incentive to self-report as unemployed.
A MIDDLE-CLASS PHENOMENON
The lack of an official support system for the unemployed in Mexico, says Quesnel, also leads to another phenomenon that tends to downgrade unemployment numbers. In Mexico, he says, poor people are rarely unemployed. "The only people who are measured in unemployment figures are middle class," he says. "These are people who have families to fall back on or who themselves have established enough of a financial cushion that they can afford to spend a few months looking for a job at the same level they had before."
On the other hand, he says, "If you are living on a day-to-day basis and you become jobless, there's no cushion. So you have to immediately look for another way of making a living."
Francisco Herrera, the plumber hanging out his shingle each day at the Metropolitan Cathedral, puts it more bluntly. "If we don't work, we don't eat," he says.
INFORMAL SAFETY NET
When members of Mexico's poor and working classes find themselves out of a job, they often turn to one of two alternatives: migration to an urban area or the United States, or the informal economy. According to INEGI, more than 11 million Mexicans 28 percent of the working population now labor in the informal economy. Some experts say that that number is probably closer to 50 percent. And while laboring in the informal sector counts officially as employment, the jobs are often unstable, poor-paying and free of benefits.
Because INEGI's new employment surveys are designed to better provide information on those who labor in the informal economy, it is possible now to glean statistics that give a better picture of the true employment situation in Mexico. For example, according to INEGI's first trimester report for 2005, 14.7 percent of employed Mexicans earned less than one minimum wage about US4.50 per day while 39 percent earned less than two minimum wages. And 63.9 percent of those who worked during the trimester did not gain access to public or private healthcare institutions through their employment.
‘LOWEST IN THE AMERICAS’
President Fox, however, is fond of trumpeting Mexico's unemployment rate as the lowest in the Americas, and continues presenting statistics to support that assertion.
Speaking to reporters after an event at the National Palace on May 30, Fox said: "When you talk about the unemployment rate, you're not talking about formal employment, you're talking about how many people over 16 in the country have work, have a productive job, and have a good income. And those who did not have all that during the month of April were at 3.7 percent." The problem with figures like these, notes Quesnel, is that when they differ so greatly from the reality that people see all around them, they lose credibility.
"The question that you immediately ask yourself," he says, "is that if Mexico has such low unemployment, why are so many Mexicans migrating to the United States and Canada in search of work instead of the other way around?" |
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