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 Business News | July 2007 
Mexico Central Bank Slams Welfare, Urges Job Reform
 Reuters
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 |  | Legal reform making it easier for firms to hire and fire workers would create jobs and allow Mexico to better compete globally.
- Guillermo Ortiz |  | | Mexico City - Mexico's welfare programs encourage the poor not to take formal jobs, the central bank chief said on Thursday, while calling for an overhaul of the country's labor laws.
Bank chief Guillermo Ortiz said he thought some poor Mexicans were not trying to find formal work so they could keep receiving benefits like healthcare from the government.
"I'm talking about diverse social programs that may be generating incentives that make some segments of the population prefer informality," he said.
Citing statistics from 2004, Ortiz said 44 percent of Mexico's labor force worked in the "informal" economy -- frequently self-employed as street vendors, taxi drivers or salespeople and outside the tax system.
Ortiz was particularly damning of a program that gives the poor access to health services without paying any taxes, arguing it was an incentive not to find formal work.
He said the program had a negative impact on productivity and hurt the public purse.
Many Mexicans are forced to work outside the formal economy because there are not enough jobs. Millions of Mexicans, unable to find decent-paying jobs at home, have left the country in search of work in the United States.
Speaking at a World Bank conference on Mexico's informal economy, Ortiz also blamed outdated labor laws for the high levels of unemployment and informal labor.
He said legal reform making it easier for firms to hire and fire workers would create jobs and allow Mexico to better compete globally. |
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