Tuesday, June 25, 2024

Jobs recovery continues but pace slowed in August

Mexico’s jobs recovery continued in August but fewer people returned to work than in previous months, data shows.

According to a survey conducted by the national statistics agency Inegi, 653,000 people returned to work last month. Many of those who re-entered the workforce had been laid off due to the coronavirus pandemic.

The number of people who re-entered the workforce in August is less than half the number who went back to work in July and just over one-tenth the number who regained employment in June.

Of those who went back to work last month, 71% had informal sector jobs without access to benefits and 29% were in the formal sector.

According to Inegi, a total of 14.1 million people lost their jobs in the formal and informal sectors between March and May due to the suspension of nonessential business activities and the government’s advice for people to stay at home.

About 10.4 million of those jobs were in the informal sector and 3.7 million were formal.

Approximately 7.2 million informal sector workers have returned to their jobs since June, a figure that accounts for about 69% of those who found themselves unemployed due to the pandemic.

The jobs recovery has been slower in the formal sector. About 1.6 million of those workers have returned to their jobs since June, 43.5% of those who were laid off.

Counting both informal and formal sector workers, 8.8 million people – 62% of those who lost their positions earlier this year – are now back at work.

The unemployment rate, according to Inegi, is 5.2%, slightly lower than the 5.4% rate in July but 1.9% above the March level.

Employment in the agricultural and industrial sectors increased by 2.3% and 1.4%, respectively, in August but commercial sector jobs including retail declined by 3.9%.

Overall, the labor market is improving albeit slowly, said Jonathan Heath, deputy governor of the Bank of México.

David Kaplan, a senior labor market specialist at the Inter-American Development Bank, said the recent job numbers – despite the improvement – “have been disappointing.”

According to Gabriela Siller, head of economic and financial research at Banco Base, there is a risk of a second round of job losses even though most sectors of the economy have now reopened.

Another concern is that many of the jobs that have been recovered pay low salaries, which doesn’t bode well for the increase in consumer spending the economy needs to bounce back from a near 20% decline in the second quarter of the year.

The prevalence of low salaries together with an employment rate still below pre-pandemic levels “represent a significant challenge for a recovery in private consumption,” said Juan Carlos Alderete, director of economic analysis at Banorte.

“It seems that the recovered jobs have been [those] with lower remuneration, which might be explained by companies’ necessity to control costs,” he said.

Based on the Inegi numbers for August as well as those for the same month published by the Mexican Social Security Institute in mid-September, job growth will be weak in the final months of 2020, according to the deputy director of economic studies at Scotiabank.

“[There is] a weak expectation for the creation of jobs in what’s left of the current year,” said Carlos González Martínez.

Source: El Economista (sp) 

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