Unprecedented 20 Million Mexicans Have Hand- To- Mouth Jobs

by Diego Cevallos

Since President Vicente Fox took office in December 2000, some 500,000 people have lost their jobs and the informal economy has expanded by 900,000 workers. Never in the history of Mexico have so many people worked in the informal sector.

"Foxilandia," as observers have sarcastically dubbed the country of "full employment" that Fox promised during his 2000 election campaign, remains a pipedream for millions of Mexicans.

In his annual address to parliament September 1, Fox admitted that there were employment problems in Mexico, and that half of the population of more than 100 million lives below the poverty line.

Three out of four jobs generated during the Fox administration have been in the informal sector, said Enrique Quintana, an economic analyst and columnist who writes for several Mexican newspapers.

Due to layoffs and scant opportunities for finding a job, hundreds of thousands join the informal economy every year or emigrate to the United States.

Around 1,000 Mexicans a day cross the border into the United States, which is home to 20 million Mexicans or their descendants, while others swell this country's army of street hawkers and other informal workers.

Mexico's official unemployment rate stood at just 3.53 percent in late July, one of the lowest levels in Latin America.

But Quintana argued that "In countries that have some system of unemployment insurance or where informal sector employment is low, perhaps the methodology used to estimate unemployment makes sense, but in the case of Mexico it comes far from reflecting reality."

The methodology used to gauge unemployment in Mexico consists of surveying people over 12, and classifies as unemployed anyone who says they did not work a single hour within the space of one week and that they sought to carry out remunerated tasks on their own or in someone else's employ.

Economic analysts and business and political leaders say the level of unemployment and the exponential growth of the informal sector reveal serious problems in the Mexican economy.

But the worst still lies ahead, according to analysts. Due to the current low level of economic growth, unemployment could continue to climb within the next few months, Alejandro Villag—mez, director of the economy department at the Center for Economic Research and Teaching, told IPS.

The Mexican economy grew 6.9 percent in 2000, contracted 0.3 percent in 2001, and rose just 0.9 percent in 2002. In January, the Bank of Mexico, the central bank, projected three percent growth for 2003, but revised that forecast downwards to two percent in late July.

Mexico's Social Security Institute, to which formal sector employers and employees must contribute by law, reported that in the first half of the year, an average of 13 companies a day, employing between one and 100 workers, went bankrupt.

Most of the newly unemployed hawk food, toys, pencils, knick-knacks, counterfeit CDs and an infinite number of goods, mainly the product of contraband or piracy, on the streets of large cities.

Nevertheless, Fox says the economy is on the right path, and urges the unemployed not to lose hope, and to create opportunities in the "unstructured" sector -- despite the fact that workers in the informal economy have no social security coverage and pay no taxes.

The government blames the country's unemployment problems on the sluggishness of the U.S. economy, which consumes 90 percent of Mexico's trade, while pointing out that the country's inflation rate is low, the local currency is stable, and the rest of the economic indicators are in order.

Mexico is on the route to recovery, and economic growth will soon be stronger and more jobs will be created, Fox states periodically, while scolding pessimists who do not believe in his promises.

"The president can say anything he wants, but no one believes him anymore, because it is getting harder and harder to find a job, and the only thing left is to sell things on the streets or maybe go out and steal," said Arturo, a former office messenger who now sells bootleg CDs in downtown Mexico City.

The economically active population, which in Mexico consists of people over 12 who are either working or looking for work, is growing in this country at the rate of one million a year, while less than 400,000 jobs are created annually.

Labor Minister Carlos Abascal told the unemployed in late August "do not despair...we fully understand how you feel...you must look for opportunities, look for them!"

Just a month before, Abascal had stated that unemployment was not a serious problem in Mexico.

But many of the unemployed have lost hope. "Mr. President, lend me some money, I don't have any, not even to buy some food," one unemployed man recently told Fox in the Pacific ocean port city of Manzanillo.

A smiling Fox responded that he was carrying no cash. Others in the crowd shouted that they needed help urgently, because they had no jobs.

Every morning, dozens of people gather in city squares in Old Mexico City holding up signs offering the broadest possible range of services.

That is where Arturo found work when a black marketeer hired him to sell pirate copies of CDs in the streets.

The unemployed should not be hesitant to seek work in the "unstructured sector" or to apply for a loan from the government for setting up a small business, says Fox.

The Fox administration encourages the informal economy with its actions as well as its words, which is dangerous, because that sector violates the laws and regulations put in place by the institutions of the state, warned Miguel Vite, a researcher at the College of Mexico.

There is no authority in the informal sector, where laws are broken, workers have no social or labor rights, and jobs are precarious, said the analyst.

Two rival groups of street vendors clashed violently in a turf war in Old Mexico City on Aug. 19, and one person was killed and several were injured amidst blows and gunshots.

The government should put the country on a different route, because it is leading it down the road to "changarrisation', a reference to changarros, or small informal businesses, when what is needed are steady, safe, legal jobs in which the labor rights of workers are respected, said Mexico's Employers' Confederation.

To help the unemployed look for formal sector jobs, authorities launched the "chambatel" programme last year, a telephone service that helps the jobless find work, and "chambanet," a similar service on the Internet.

But only 16,000 of the 222,000 people who have called chambatel have found jobs, while 107,000 unemployed people are registered on the chambanet web site, compared to just 12,500 jobs that are offered there.