zirahuén villamar, fes mexico
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March 2011 Friedrich-Ebert-Stiftung – AG QUIZ 1
Mexico’s Economy – A Quick Overview
Input to the Conference „Union Coordination in the Automobile Industry –
Building Briges“Mexico City
September 30th - October 3rd, 2013
Zirahuén Villamar, FES Mexico
September 2013 Friedrich-Ebert-Stiftung – Mexico
March 2011 Friedrich-Ebert-Stiftung – AG QUIZ 2
Mexico: A Big Economy, an Unbalanced Society
GDP Size (2012)
Source: World Bank http://databank.worldbank.org/data/download/GDP.pdf
Household and Personal Income (2010)
• A Middle-Class Nation?
• … not so actually.
Source: National Institute of Geography and Statistics (INEGI)http://www.inegi.org.mx/inegi/contenidos/espanol/prensa/Boletines/Boletin/Comunicados/Especiales/2013/junio/comunica6.pdf
September 2013 Friedrich-Ebert-Stiftung – Mexico
Class Houseohold People% of total
Upper
Middle
Low
March 2011 Friedrich-Ebert-Stiftung – AG QUIZ 3
Economic Performance – The Quest for Stability and...
• After a traumatic and volatile 80s decade, a new culture of economic stability• Big national efforts to gain external credibility in order to set foundations for
economic activities within the North American integration process• Reforms for the new Mexican economy• NAFTA enters into force in January 1st 1994 • Greater role of market forces and private actors, lesser for State policies and
public players and interventions• A big opening to World economy: goods, services and finances• Credibility meant stability:
– Inflation (Single aim, autonomous Central Bank)– Public finances (Zero deficit)– Exchange rate (rather free flotation)
• Financial crisis in 1995 (Tequila effect), with further effects on the real economy the following years
• A decoupling national economy: those sectors and activities (few regions and players as well) linked to the NAFTA and those (most of regions and population) not in the NAFTA orbit
September 2013 Friedrich-Ebert-Stiftung – Mexico
March 2011 Friedrich-Ebert-Stiftung – AG QUIZ 4
Economic Performance – … the Unwanted but Logical Result: Low Growth
Rationale• After the second trauma of 1995 crisis,
the culture of stability and equilibria was reinforced
• Further reforms in public finances, monetary fundamentals and more free trade agreements
• In order to fulfill such goals, little or none chances for economic public policies were left
Results• Mediocre GDP growth, quite below
potential calculations• Real 30-year-average: 2% growth• Exchange rate benefits exports of
particular goods and lots of imports, but it doesn’t foster the internal market
2008-2013• When the crisis arose, there were no
countercyclical meassures available• In 2009 Mexico got the worst GDP
performance in Latin America• The recovery has been weak • Updated forecasts are getting more and
more pessimistic for the upcoming years
September 2013 Friedrich-Ebert-Stiftung – Mexico
Source: Organization for Economic Co-operation and Development (OECD) http://www.keepeek.com/Digital-Asset-Management/oecd/economics/oecd-economic-surveys-mexico-2013_eco_surveys-mex-2013-en#page16
March 2011 Friedrich-Ebert-Stiftung – AG QUIZ 5
Poverty – A Vulnerabilities ApproachMultimensional,
2012 DataDeprivationsEducationHealth ServicesSocial SecurityQuality and Spaces of the DwellingBasic Household ServicesAccess to food
Results45.5% of population living in poverty (53.3 mill)Modererately poor: 37.7% of population, income under $180 usd / month (urban) or $115 usd /month (rural) (41.8 mill)Extremely poor: 9.8% of population, income under $86 usd /month (urban) or $62 usd / month (rural) (11.5mill)
September 2013 Friedrich-Ebert-Stiftung – Mexico
Source: National Council for the Evaluation of Social Development Policy (CONEVAL) http://www.inegi.org.mx/inegi/contenidos/espanol/prensa/Boletines/Boletin/Comunicados/Especiales/2013/junio/comunica6.pdf
March 2011 Friedrich-Ebert-Stiftung – AG QUIZ 6
Labour – Not a Matter of Unemployment…
People at work Unemployment rate• Structural unemployment is below 6%• Even during the worst year of the crisis
(2009), this number was the peak• Latest data (August 2013) shows a 4.78%
Source: El Economista, September 20th, 2013 http://eleconomista.com.mx/industrias/2013/09/20/desempleo-cede-su-menor-nivel-seis-meses
• Total population: 118 mill. (ca.)• Economically Active Population: 52 mill. (ca.)• Working population: 49 mill. (ca.)
September 2013 Friedrich-Ebert-Stiftung – Mexico
Source: National Institute of Geography and Statistics (INEGI)http://www.inegi.org.mx/inegi/contenidos/espanol/prensa/boletines/boletin/Comunicados/Especiales/2012/Diciembre/comunica3.pdf
March 2011 Friedrich-Ebert-Stiftung – AG QUIZ 7
Labour – …but of Informal Employment
Informal Employment• Around 60% of employment is informal: 29 mill.• Much of the employment growth has been in informal jobs• It means people (workers and their families) with no social
protection• Low added-value sectors/activities• Many workers are self-employed• Geographical characteristics: Informal Employment is
concentrated in Southern and Center States
September 2013 Friedrich-Ebert-Stiftung – Mexico
March 2011 Friedrich-Ebert-Stiftung – AG QUIZ 8
ProductivityWorking a lot…
What• People in Mexico work 2,250 hours a year, more
than the OECD average of 1,776 hours. • 29% of employees work very long hours, much more
than the OECD average of 9%Why• Low salaries force people to find another job to
compensate their incomes• High number and hours of unpaid activities to be
performed • Low productivity economic activities (informal sector)
…because of low Productivity• As a whole, Mexico has the lowest Labour Productivity
among OECD countries
• Total Factor Productivity, has actually decreased nearly 10% compared to 1991
• In some particular fields, Productivity is similar to other economies
• This national differences underline the disparities, whether geographical or by income
September 2013 Friedrich-Ebert-Stiftung – Mexico
Source: Organization for Economic Co-operation and Development (OECD) http://www.oecdbetterlifeindex.org/countries/mexico/ and http://dx.doi.org/10.1787/888932708674
Source: Organization for Economic Co-operation and Development (OECD) http://dx.doi.org/10.1787/888932706546
March 2011 Friedrich-Ebert-Stiftung – AG QUIZ 9
Low and Stagnated Productivity• In the last decade, the national average Labour Productivity has decreased• Ups and downs are due to the economic cycle: all in all, they are recoveries to
certain levels but not true growth• A significant part for low growth of GDP lies on this reason
September 2013 Friedrich-Ebert-Stiftung – Mexico
Source: National Institute of Geography and Statistics (INEGI) http://www.stps.gob.mx/bp/secciones/conoce/areas_atencion/areas_atencion/web/productividad/Aspectos.pdf
Labour Productivity Index GDP Index Working Population Index
March 2011 Friedrich-Ebert-Stiftung – AG QUIZ 10
Labour costsFeatures• In order to attract foreign investments
and to foster local competitiviness Mexican labor costs have constantly decreased compared to those of other emerging industrial countries competitors (vr.gr. China and Brazil)
• This trend has its origins not only in diminishing Mexican costs by itself (flexibilization of the labour market regulation) but also in the improvements of other countries’ salaries
Effects• Little or inexistent options for an internal
market driven economic growth• A robust race to the bottom behavior
Source: Organization for Economic Co-operation and Development (OECD) http://www.keepeek.com/Digital-Asset-Management/oecd/economics/oecd-economic-surveys-mexico-2013_eco_surveys-mex-2013-en#page16
September 2013 Friedrich-Ebert-Stiftung – Mexico
March 2011 Friedrich-Ebert-Stiftung – AG QUIZ 11
The Reforms The new Government (2012-2018) and the Pact for Mexico• Great expectations• Political, economical and social agreement among main Political Parties
Reforms• Labour Law (2012, before new Government took office)• Education (passed on August 2013)• Finances and Banking (passed on September 2013)• Energy (Oil and Electricity) (being disscussed now)• Fiscal (being discussed now)
Programmes• Cruzade against Hunger (Ministries and Agencies co-ordination)• Democratization of Productivity (National Development Plan’s Goal)• Formalizing Employment Programme (part of the Fiscal Reform)
September 2013 Friedrich-Ebert-Stiftung – Mexico
March 2011 Friedrich-Ebert-Stiftung – AG QUIZ 12
Thank you!
zirahuen.villamar@fesmex.org
September 2013 Friedrich-Ebert-Stiftung – Mexico
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