Tuesday, June 25, 2024

Coronavirus erases 1 million formal jobs in first half of year

More than 1.1 million formal sector workers lost their jobs between March and June due to the coronavirus pandemic and associated restrictions.

Mexico shed a total of 1,113,677 formal sector jobs during the four-month period, according to the Mexican Social Security Institute (IMSS).

Considering the growth in employment recorded in January and February, net job losses in the first half of the year totaled 921,583.

IMSS reported on Sunday that 83,311 formal sector workers lost their jobs in June, the first month of the so-called “new normal” in which coronavirus restrictions applied on a state by state rather than national basis.

While it doesn’t make for happy reading, the result is an improvement compared to March, April and May during which formal sector job losses totaled 1,030,366.

Since Covid-19 was first detected in Mexico at the end of February, almost 184,000 formal sector workers in Mexico City lost their jobs, a figure that accounts for about one-sixth of all job losses in the country over the past four months.

Quintana Roo, whose economy is heavily dependent on tourism, shed just over 113,000 jobs in the same period, while more than 80,000 people lost their jobs in both Nuevo León and Jalisco, home to the large cities of Monterrey and Guadalajara.

As a result of the heavy job losses, the number of people employed in the formal sector is 4.3% lower than a year ago. The annual decline is the largest since IMSS began keeping comparable records in 1997.

Compared to the end of June 2019, the number of people employed in the construction, business service and mining sectors has declined by 11.6%, 8.1% and 6.5%, respectively.

Quintana Roo suffered the worst year-over-year decline in employment numbers as expressed in percentage terms. The number of people working in the formal sector in the Caribbean coast state at the end of June was 22.9% below the level at the end of the same month last year.

With an 11.7% drop in formal sector employment, Baja California Sur, which also depends on tourism for a significant percentage of its GDP, recorded the second largest decline over the past 12 months, while Guerrero saw a 7.2% fall to rank third.

Accumulated job losses by state from March until June, in thousands of positions.
Accumulated job losses by state from March until June, in thousands of positions. el financiero

However, IMSS data shows that more people were employed in some sectors and states at the end of June than a year earlier.

Jobs in the agricultural, social services and electricity sectors increased by 3.5%, 2.3% and 0.1% respectively, while formal sector employment was up by 1.4% at the end of June in Tabasco and 0.1% in each of Michoacán and Baja California.

The total number of formal sector jobs lost over the past four months is more or less in line with a forecast by President López Obrador, who said July 1 that he expected the coronavirus crisis to cost Mexico 1 million positions.

The president claimed that job losses had “bottomed out” and predicted that an employment recovery would commence in July.

However, experts who spoke with the newspaper El Financiero warned that more jobs could be lost and that an employment recovery, when it comes, will be slow.

“It’s still too soon to know if we’ve already bottomed out,” said Carlos López Jones, chief economist at economic forecasting company Tendencias Económicas y Financieras.

He said it is likely that a lot of businesses will close in the second half of the year because their sales are still low despite their recent reopening. As a result, more job losses can be expected in coming months.

“Recovering the level of formal employment we had before the pandemic could take the rest of [López Obrador’s] six-year term,” López Jones said.

Jesuswaldo Martínez, a researcher at the Senate’s Belisario Domínguez Institute, said that while it’s “desirable” to think that job losses have “bottomed out,” the reality remains that the coronavirus pandemic is not under control, and that situation will hinder economic recovery.

“What [the lack of control] generates is a higher degree of uncertainty,” Marínez said, adding that while the virus continues to spread unabated, “it’s likely that economic activity won’t recover and there won’t be investment or jobs.”

Carlos Ramírez of the consultancy firm Integralia also said that he feared it will take years to recover the more than 1 million jobs that have been lost.

Mexico’s economy is forecast to suffer a deep recession in 2020 as a result of the coronavirus pandemic and the measures put in place to slow its spread.

The International Monetary Fund predicted in late June that Mexico’s GDP will shrink 10.5% this year, a bigger contraction than that forecast for every other country in Latin America.

Source: El Financiero (sp) 

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