Labor market weakness continues; employment fell for the second month in a row

The working market in Mexico it weakened for the second consecutive month. The employed population was reduced by 544,350 people in September and the widespread unemployment it rose to its highest level since February this year, according to the National Survey of Occupation and Employment (ENOE).

With this new fall, the recovery of the labor market is 638,961 positions below the level prior to the health emergency caused by covid-19, which implies a setback after July was able to return to the occupation dimensions observed before the first impact of the pandemic.

The occupation was not the only one affected in the ninth month of the year, the unemployed population lost 109,604 people and, as a result of this, the unemployment rate decreased 0.14 percentage points, to settle at 4.4 percent. However, “this decrease in the unemployment rate is not indicative of an improvement in the country’s employment situation,” said Gabriela Siller, director of Economic and Financial Analysis at Banco Base.

The fall in both indicators suggests that Mexicans perceive a more adverse environment to seek employment, since the unemployment losses contrast with the earnings on idle. Within the non-economically active population (PNEA), the group of “available”, which includes those who are not looking for work, but would accept one if offered, grew by 854,434 people.

“Being somewhat worrying, the rise was concentrated in those who ‘do not seek employment because they consider that they have no possibility of finding it’, which reflects a most adverse environment for the activity, ”said Juan Carlos Alderete, director of Banorte’s Economic Analysis.

As a result of this, the extended unemployment rate, which concentrates the unemployed and the inactive available, went from 15.2 to 16.3% —the third highest level so far this year — to cover 10.7 million people.

Alejandro Saldaña, Chief Economist at Banco Ve por Más, agreed that the decline in unemployment is a consequence of lower economic participation, which could be affected by the fear of contagion despite the fact that the third wave of covid-19 it began to fade in September.

For her part, Gabriela Siller highlighted that the contraction of the employment and unemployment indicators in September is similar to the trend observed at the beginning of the pandemic, where not only jobs were lost, but the adverse environment generated greater inactivity to search Job opportunities.

“The impact occurs in a similar way to that of April 2020 when the crisis began, because at the same time that jobs are lost, the number of unemployed, given that these people are not looking for work because they consider that they do not have the possibility of getting one at this time ”, he pointed out.

74% of the fall in employment was concentrated in informalityThis is largely explained by the activities that reported losses in their employment levels. In this sense, the informality rate fell two basis points to stand at 56.2 percent.

Despite this reduction, the informality rate it is 0.5 percentage points above its level prior to the health emergency and has shown greater resistance to the downside.

Formality, for its part, represented 25% of the contraction in jobs, with a loss of 139,046 jobs, which contrasts with the data of 174,000 new jobs created during September reported by the Mexican Institute of Social Security (IMSS ).

“We consider that this report was negative, with signs that a more complicated environment in the previous months continued to impact the Labor conditions in September ”, stated Juan Carlos Alderete.

Between precariousness and necessity

The reduction in the level of employment led to a decrease in the underemployment rate, which includes people who work reduced hours and need to work longer hours, which fell from 13 to 12.2% in its monthly comparison. Despite this reduction, this indicator of job insecurity remains 3.08 percentage points above its level prior to the pandemic.

Meanwhile, the labor gap that reports the broadest need for employment in the country, and that considers the unemployed, the inactive available and the underemployed, was located in 26.6% of the workforce potential, which implies an increase of three basis points with respect to the previous month and a stagnation of the indicator in the last seven months.

“This level is well above the 18.9% averaged in 2019 and has faced resistance from a high rate of disguised unemployment, which implies that not all the people who left the labor market in the context of the epidemic have returned to the search for employment ”, highlighted Marcos Daniel Arias Novelo, an economic analyst at Monex.

The specialists project better results for the occupation as the level of contagions is considerably reduced and the epidemiological traffic lights allow the reopening of more activities, as well as in the face of greater mobility of people and the sales season of November and December. Although there are still some risks that could affect the recovery of the occupation in the coming months.

“The reduction of infections will boost employment in the short term, but may be limited by a low investment level”Warned Alejandro Saldaña.

For his part, Juan Carlos Alderete pointed out that although positive figures are expected in the following reports, attention must be paid to the impact of the progressive return to classes, which can represent a brake for some parents to seek employment again.

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