Economics: Changing job market and mood
At first glance, the economic uncertainty and major policy overhauls that have characterized the first seven months of President Andrés Manuel López Obrador’s administration don’t appear to have led to changes in the country’s job market on a significant scale. However, there are some signs that suggest we can expect significant points of stress heading forward.
For starters, it appears we may be witnessing a slight reversal of the extended downtrend in the unemployment rate that dates back to the first half of the administration of President Enrique Peña Nieto, although it is averaging roughly 3.4% so far this year. The number of people employed in Mexico continued to climb during the first quarter of this year, and the main indicator of formal sector employment increased by a sequential 1.3% through the end of March, although the annual increase in payroll employment was the least pronounced in more than nine years.
The percentage of the EAP consisting of underemployed workers has been trending higher, including in recent months, and an especially pronounced jump in May took it to its highest reading since late 2016. Moreover, people in critical employment conditions grew to 19% from 15.3% the previous quarter, although much of that shift may have come from many low-income people failing to benefit directly from the minimum wage hike.
In many cases the extent of the latest wage increases were the result of two years in which the minimum wage, and wage adjustments in general, lagged inflation.
Changes in the job market are occurring at a time when quarterly labor productivity has been decreasing for five quarters. Labor strife remains historically low (2,327 strike calls have been filed this year, but people walked off the job in only seven cases, and there were only five such work stoppages in that same 5M period for the past five years), but there were also a series of wildcat strikes and other actions in some regions earlier this year.
This could become a potentially explosive mix in a future marked by both mounting inflation pressures and labor instability in specific sectors of the economy.
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