These lines will contain more questions than answers and I will start with the one that perhaps determines much of the way our job market works. When you start your job search, what is more important to you: having a job with regular pay or that this job has the benefits required by law? The questions would continue: do you know what benefits you should theoretically be granted? If you had access to all those benefits that come with a formal job, would you use them? which? Which ones are of little interest to you?
Now let’s stretch the league a little. If the company you work for is large – more than 250 employees according to the definition applicable in Mexico – the likelihood of taking advantage of these benefits will be significantly higher. It is no mere coincidence that the northern states of the country have lower informality rates than the southern states. In Nuevo León, Coahuila and Chihuahua, less than 35% of the employed population works without benefits. In Guerrero, Chiapas and Oaxaca more than 75% of those who work have no benefits. Nothing.
Which Citizen’s Movement promotes more days off for decent work? Excellent. It’s a shame that over 54% don’t care because they don’t even get half the benefit. That there is now a law that requires the employer to provide chairs so that workers do not stand for the duration of their working day? It’s the bare minimum, but, again, only a fraction will see the benefits. It’s better not to even talk about Afores. Great – I say this without any irony – the contribution of these resources to the country’s savings and investment possibilities at an aggregate level. But for most workers, at best, it will simply be a concept.
In that kind of magical thinking we all fall into from time to time, we assume that the job market is some kind of Martian imposition. One day Mexico appeared, ready and fit, and had the labor laws we have today. Big mistake. The fractures in our labor market are of our own making. We manufactured them by creating an employment-linked social security system in the middle of the last century, as was done then. Of course at the time life expectancy was 50 years and the retirement age was 65. The system worked. But not anymore.
The most recent unemployment rate, corresponding to September this year, was 2.7%. Excellent data in historical terms. It would even be enough for this figure to be presumed early in the morning as one of the lowest in recent history. But what exactly does this metric capture? When INEGI asks people about their employment status, if they answer that they worked at least one hour in the week in which the survey was carried out, that’s it, popcorn, they are counted as employed. That number is divided among the economically active population, essentially people – of working age – who want and can have a job. This is the unemployment rate.
With this definition – which follows the recommendations of the International Labor Organization – the percentage is not at all surprising. It shouldn’t attract anyone’s attention, much less cause celebration. In Mexico the unemployment rate is above all an indicator of the flexibility of the labor market. If the formal labor market – the one that pays all the benefits – becomes more expensive, the market will shift towards the informal one – the one that has no restrictions.
But again, it’s a market we created. We have designed it legislation after legislation, including positive changes that are only good for the formal market.
It is easy to think of the job market as a whole divided into two: the formal ones and the non-formal ones. But the reality is much more complex. We all go through informality and formality at some point in life. Women, in particular, move more informally because the few – if any – restrictions of that market give them the flexibility they need in certain particular moments of life.
But beyond that, the world has changed and the pace has accelerated since the pandemic. It is not at all uncommon to find someone who has a formal job and another without benefits. A formal one – without valuing let alone using some of the benefits – and many others to supplement the income. Santiago Levy is absolutely right when he states that not only is the work structure we have unsustainable, but that he does not see in any political force the interest, the desire and even less the will to attempt a change.
The public debate usually remains on the surface: more holidays, more days off, better conditions, more “dignified” elements of employment. All of this matters. But it only matters for a portion of the market. We continue to design labor policy as if the incentives, rules and obligations applied homogeneously, as if we all compete in the same field. It’s not like that. Most workers are completely alien to what is discussed in the networks, in Congress or in speeches. And as long as we continue to ignore this original dysfunction, we will continue to believe that informality is an accident and not the result of public decisions accumulated over decades.
None of this is inevitable, but it requires a profound overhaul: separating social security from employment, simplifying hiring, reducing the costs of formalities that do not generate wealth and, above all, accepting that new forms of work do not fit the patterns designed for the economy of the 1950s. The real challenge is not in adding more obligations to the formal world, but in building a system that does not push the majority into informality. The opposite – continuing to patch up an exhausted model – will take us to exactly the same place: a job market that works for a few, ignores many and condemns millions of people to precariousness as if it were something natural.
