Article from Mexican Labor News & Analysis
Published by UE International.
Date published: July, 2016
Web version: http://www.ueinternational.org/Mexico_info/mlna_articles.php?id=247#1852
Mexico’s economy shrank in the second quarter, and though this was the first time in three years that it declined, it hasn’t grown much in the recent past either. Throughout the first 16 years of the twenty-first century, Mexico’s growth rate has averaged just 2 percent.
The Mexican Petroleum Company (PEMEX), a major component of the national economy, has lagged. But industrial production also fell 1.7% from the first quarter, agricultural output declined by 0.1% and services showed no growth.
President Enrique Peña Nieto boasted that in the last 43 months Mexico had created a little more than 2.03 million new jobs. He failed to say, however, that that meant another 2 million Mexicans had failed to find jobs, since there were 4.3 million Mexicans seeking employment.
A recent report by the Organization for Economic Cooperation and Development (OECD) of which Mexico is a member—the report is titled Employment Outlook 2016”—stated that the labor situation in Mexico is “complicated and worrisome.” Mexico, said the report, has low wages, low productivity, high unemployment, a great deal of informal employment, and a lack of jobs for youth, many of whom neither work nor study.
At the same time, the Mexican government has cut its federal budget. The Mexican government cut US$7 billion earlier this year and after Brexit, that is, when Britain left the European Union, Mexico cut another US$1.7 billion. These budget cuts have led to layoffs for 11,256 supervisory and middle management workers in the Secretary of Finance alone.
Brexit also led to a fall in the value of the peso to an all time low at at 19.52 pesos to the dollar before stabilizing at 18.75. For decades the peso stood at 12.50 to the dollar. The devaluation of the peso may help exports but makes life more expensive for many Mexicans who must purchase goods made abroad.
The Mexican government claims that it has reduced poverty from 48 to 46 percent of the population, but the claim is false. The reduction appears to be due to a change in accounting procedures. The change led to the resignation of Miguel Juan Cervera Flores, the general director of the National Institute of Statistics and Geography (INEGI).