The Organization for Economic Cooperation and Development (OECD) said that Mexico will be among the countries least affected by the unemployment caused by the coronavirus pandemic. The analysis is part of the organization’s Employment Outlook.
According to the organization, job openings in Mexico will drop 1% in 2020 and advance 1.8% in 2021, if the country faces a second COVID-19 outbreak this year. But despite the decline this year, the country will be among the least affected by unemployment, alongside South Korea, Austria, Germany, and Japan. Why? Because in Mexico it is more difficult to fire people because of stricter labor laws.
“Yet, while still small compared to other OECD countries, the forecasted increase in unemployment rate is significant and above the levels of the 2009 global financial crisis. Without a second wave, the Mexican unemployment rate is projected to peak at 7.2% in Q2 2020, falling back to 5.9% at the end of 2021. The second wave scenario forecasts similar trends for Mexico, but with a peak in unemployment rate of 7.5% in Q4 2020,”says OECD note about Mexico.
It’s important to notice that OECD observation about labor laws concerns the formal labor market of Mexico, a country where most people in the workforce are able to derive their income from informal jobs and activities.
According to data from the National Institute of Geography and Statistics (Inegi), in May, 1.9 million people entered the informal sector in Mexico, raising the informality rate to 51.8% of the employed population, 4.1 percentage points higher than the last month.
Among the OECD countries, the wide unemployment rate rose from 5.2% in February to 8.4% in May. Up to 10 times fewer hours were worked in some countries, compared with the first months of the 2008 financial crisis. Unemployment is projected to reach nearly 10% in OECD countries by the end of 2020, up from 5.3% at year-end 2019, and to go as high as 12% should a second pandemic wave hit. A jobs recovery is not expected until after 2021.