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UNCLAS SECTION 01 OF 03 MEXICO 005930 
 
SIPDIS 
 
SIPDIS 
 
DEPT FOR DRL/AWH AND ILCSR AND WHA/MEX, DOL FOR ILAB 
 
E.O. 12958: N/A 
TAGS: ELAB ECON SOCI PGOV PINR MX
SUBJECT: OFFICIAL FIGURES SPIN UNEMPLOYMENT FIGURES AND THE 
GROWTH OF MEXICO,S INFORMAL ECONOMY 
 
REF: REF: MEXICO 4150 
 
¶1.  SUMMARY: On November 15 INEGI, the GOM,s National 
Statistics Institute, issued a report stating that during the 
twelve-month period ending September 2007 Mexico,s official 
unemployment rate dropped from 4 percent to 3.9 percent.  The 
INEGI report also indicated that during the same twelve-month 
period some 130,000 additional workers found jobs on the 
informal economy.  This acknowledged increase in the 
estimated number of persons employed on the informal economy 
brings the figure of those similarly employed to roughly to 
11.53 million workers.  According to INEGI, this number 
represents 26.9 percent of all economically active persons in 
Mexico over 14 years of age.  The official estimate of those 
employed in Mexico,s informal economy notwithstanding, both 
the World Bank and the OECD calculate that the real number of 
persons similarly employed is closer to 45 percent of the 
country,s working population.  In commenting on the INEGI 
report, a senior Secretariat of Labor (STPS) official pointed 
to the employment figures as proof that President Calderon,s 
administration was keeping its campaign promise to promote 
job creation.  The STPS official also stated that the GOM was 
currently in the process of revising its only formal job 
creation program &First Job8.  Unfortunately, the &First 
Job8 program is widely viewed both by Mexico,s private 
sector and by its organized labor movement as an overly 
bureaucratic initiative that has thus far produced few 
concrete results.  END SUMMARY. 
 
 
A DROP IN OFFICIAL UNEMPLOYMENT FIGURES 
--------------------------------------- 
 
¶2.  On November 15 INEGI, Mexico,s National Statistics 
Institute, released a report that gave the GOM,s official 
unemployment figures for the twelve-month period ending 
September 2007.  According to INEGI, during the period in 
question, the official unemployment rate in Mexico showed a 
minor drop from 4 percent to 3.9 percent.  The report 
announcing this, at best, slight drop in unemployment 
received considerable coverage in the Mexican media; far 
beyond what might be reasonably expected for such a modest 
achievement.  The media attention given the latest release of 
Mexico,s official unemployment figures seems especially 
puzzling when one recalls that this past July the GOM,s 
Secretariat of Labor (STPS) was estimating the official 
 
SIPDIS 
unemployment figure at only 3.6 percent. 
 
¶3.  Regardless of which number one chooses to use for 
Mexico,s official unemployment rate, 3.6 percent or 3.9, 
both figures are somewhat misleading and should be viewed 
cautiously.  Mexico,s official unemployment figures count 
people as employed if they work as little as one hour a week, 
make little distinction between those formally and fully 
employed, underemployed person or persons actively looking 
for work; all are counted as being employed.  Once these 
factors are taken into account the real unemployment rate 
could be three or four times as high as the official figures. 
 The rise in the official unemployment figures from 3.6 to 
3.9 percent could be attributed to normal population growth 
and the consequent increase in the number of new entrants 
into the Mexican job market.  However, given the ongoing, 
massive, and all but officially GOM sanctioned, migration of 
Mexican workers to the US, it is difficult to see a bright 
side to the current employment situation in Mexico. 
 
 
INFORMAL ECONOMY CONTINUES TO GROW 
---------------------------------- 
 
¶4.  In the same report that announced the modest drop in 
Mexico,s official unemployment figure INEGI also released 
figures showing an increase in the number of persons employed 
in the informal economy.  According to INEGI, the number of 
persons calculated to be working in the informal economy is 
estimated at roughly 11.53 million persons which the GOM 
agency states is some 26.9 percent of all working people over 
14 years of age.  This figure of over 11.5 million workers, 
which is INEGI,s best guess for the twelve-month period 
ending September 2007, represents an increase of nearly 
130,000 people over the same period in the previous year. 
 
¶5.  In responding to press inquiries about the meaning of the 
 
MEXICO 00005930  002 OF 003 
 
 
figures for the growth in the informal economy INEGI 
acknowledged that the increase in informal jobs was a result 
of the slow growth of the Mexican economy.  Another possible 
but unacknowledged reason for the growth informal economy can 
also be guessed at by an examination of some of the other 
figures contained in the INEGI report.  These figures showed 
that for the roughly 42.9 million persons who are employed in 
the formal economy, 32.5 percent of them earn, at most, three 
times the daily minimum wage; or approximately USD 15.00. 
Given the number of persons whose salaries on the formal 
economy do not pay the equivalent of USD 15.00 per day it is 
not surprising that many workers are prepared to try their 
luck on a job in the informal economy (or risk the hazards of 
migrating to the US). 
 
 
WORLD BANK, OECD DIFFER WITH INEGI ON THE INFORMAL ECONOMY 
--------------------------------------------- ------------- 
 
¶6.  Although INEGI places the number of people employed in 
Mexico,s informal economy at 26.9 percent of working people 
over the age of 14 both the World Bank and the OCED differ 
with this official GOM figure.  According to these two 
international financial institutions, the real size of the 
number of persons working in Mexico,s informal economy is 
somewhere between 42-45 percent of all working people.  The 
World Bank and OCED figures closely match an estimate made 
this past July by the Governor of the Bank of Mexico, the 
country,s central bank, who stated that 44 out of every 100 
jobs created in Mexico are generated in the informal economy. 
 
 
STPS OFFICIAL PROMOTES JOB CREATION FIGURES; PROMISES MORE 
--------------------------------------------- ------------- 
 
¶7.  Shortly after the release of the INEGI report an 
Assistant Secretary level official of the GOM,s Secretariat 
of Labor (STPS) took advantage of a public labor related 
event to laud the government,s accomplishments with regard 
to job creation and reducing unemployment.  According to the 
STPS official, President Calderon is living up to his 
campaign promise to be the &Employment President8.  In 
support of this position the STPS official claimed that in 
the first nine months of the Calderon administration the 
government had created 618,000 jobs on the formal economy 
with all of them registered with Mexican Social Security, 
IMSS (which is responsible for administering Mexico,s 
national health care and pension/retirement systems).  The 
statement of the STPS official notwithstanding, an economist 
interviewed in one of Mexico more well respected newspapers 
claimed that at least 51 percent of the jobs the GOM says it 
created are either part-time jobs or outsourced jobs with 
little or no stability. 
 
¶8.  The STSP official also stated that the GOM was currently 
in the process of revising and re-launching its only formal 
job creation program &First Job8.  One of the main reasons 
sited by Mexican businessmen as a major obstacle to job 
creation is the high cost and bureaucratic complexity for 
employers of enrolling workers into Mexico,s Social Security 
system.  A significant number of employers in Mexico go to 
great lengths to avoid the cost and difficulty of enrolling 
their employees into IMSS.  In order to overcome this 
barrier, and spur job creation, the Calderon government 
proposed to subsidize the cost of enrolling new employees 
into IMSS for up to one year for all workers hired into 
permanent positions with its &First Job8 program. 
 
¶9.  Unfortunately, the &First Job8 program is widely viewed 
both by Mexico,s private sector and by its organized labor 
movement as an overly bureaucratic initiative that has 
produced few concrete results.  After several months of 
seeing how the &First Job8 program has been implement 
Mexico,s business sector and organized labor movement are in 
agreement that the complexity of enrolling a newly hired 
employee into it is every bit as difficult, if not more so, 
as it is to enroll a new employee hired without the program. 
Moreover, they claim that the subsidies promised do not cover 
the full cost of IMSS enrollment.  The subsidies paid vary 
greatly with the type of job and are often too low to entice 
employers to put up with the increased administrative burden. 
Such negative criticisms of the &First Job8 program 
notwithstanding, the STPS official stated that the GOM was 
 
MEXICO 00005930  003 OF 003 
 
 
committed to making it work.  He did not however, specify 
when the revised &First Job8 program would be officially 
re-launched. 
 
 
COMMENT 
------- 
 
¶10.  The INEGI report was an opportunity for the GOM to 
remind the country that it was aware of the vital importance 
of job creation.  It could also have been an opportunity to 
honestly acknowledge that the government,s efforts at job 
creation have yet to produce any significant results. 
Indirectly, the GOM did signal its intention to solider on 
with its endeavors to address Mexico,s pressing need for 
more and better paid jobs.  Mostly, however, the GOM,s 
handling of the results of the INEGI report came across as an 
attempt at spin designed to show everyone that President 
Calderon had not forgotten his campaign promise to be the 
&Employment President.8 
 
 
 
 
 
 
 
 
Visit Mexico City's Classified Web Site at 
http://www.state.sgov.gov/p/wha/mexicocity and the North American 
Partnership Blog at http://www.intelink.gov/communities/state/nap / 
GARZA