Employment and poverty

1. Employment and poverty Eduardo Zepeda

2. Mexico’s growth performance deteriorated after debt crisis and with IMF-WB style stabilisation

3. Poverty increased with 1995 crisis, otherwise declined but remained high. Inequality has also remained high and possibly w/increasing trend

4. Mexico’s mixed recent performance of pro-poor growth

5. Urban non-agricultural employment has been drifting away from manufacturing into services

6. That is, into low-mid wage activities, but relative wages in manufacturing are also declining

7. Employment elasticity in mnf was high (i.e. but no productivity growth), wages declining.

8. High employment elasticity manufacturing (assembly->manufacture)

9. Low employment elasticity manufacturing (manufacturing-> assembly)

10. 90-94 pro-poor despite informalisation?; 94-96 worsening in employment; 96-00 pro-poor & pro-employment

11. Memo: indicators of the order of magnitud of informality

12. Informality: anti-cyclical escape valve

13. Ees in micro have gained; ees in large have retained their edge

14. Poverty among working population by status • The incidence of poverty is high, evidently among unemployed and vulnerable youth. • The increase in poverty among the vulnerable youth is rapid.

15. Poverty among working population by sector • The incidence of poverty is highest in agriculture, then construction and light industry • The reduction of poverty was fastest among extractives and services.

16. Poverty among working population by sector • The incidence of poverty is highest among agriculture, unpaid and self employed • The reduction of poverty was fastest among owners of micro bs.

17. CONCLUDING REMARKS • Macro stabilisation has been succesful in bringing down inflation, aligning the budget and in bringing international rules to financial and banking services. • The economy has modernise (the largest chink of FDI in the 90s went to services) • But the economy has not growth sufficiently. • Poverty and inequality remain a problem.

18. CONCLUDING REMARKS • Trade, investment and financial market liberalisation has not been enough to increase growth. • The big star of export oriented re-industrialisation, maquiladora, is now running out of steam, with China’s accession to the WTO. • Other types of re-industrialisation, such as LAC’s resouce based path needs to be further developed. • If Mexico’s has faced difficult employment challenges that have led to large informal activities, now that maquiladora is weakening the employment challenge will be more difficult.

19. CONCLUDING REMARKS • Poverty reduction strategies are comprehensive, and resources channeled to these activities have been recently increasing: 1.0% gdp 96-00, 1.4% in 2004. • But temporary employment programmes are declining: 1.2 m. jobs in 99 vs 300 th. in 04 • 24% of expend in 01 vs 6% in 04. • Micro credits & supports for micro production are declining: 3% in 01 vs 1% in 04.

20. CONCLUDING REMARKS • There is a clear need to support employment and productivity enhancement in: • urban & particularly in rural areas • focusing on micro bs & the self employed. • Beyond these, there is a need to increase the employment elasticity of manufacturing.