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Factores de producción / Mercado laboral : Situación y agenda laboral (Inglés- 2007)
Factores de producción / Mercado laboral : Situación y agenda laboral (Inglés- 2007)
Factores de producción / Mercado laboral : Situación y agenda laboral (Inglés- 2007)
Factores de producción / Mercado laboral : Situación y agenda laboral (Inglés- 2007)
Factores de producción / Mercado laboral : Situación y agenda laboral (Inglés- 2007)
Factores de producción / Mercado laboral : Situación y agenda laboral (Inglés- 2007)
Factores de producción / Mercado laboral : Situación y agenda laboral (Inglés- 2007)
Factores de producción / Mercado laboral : Situación y agenda laboral (Inglés- 2007)
Factores de producción / Mercado laboral : Situación y agenda laboral (Inglés- 2007)
Factores de producción / Mercado laboral : Situación y agenda laboral (Inglés- 2007)
Factores de producción / Mercado laboral : Situación y agenda laboral (Inglés- 2007)
Factores de producción / Mercado laboral : Situación y agenda laboral (Inglés- 2007)
Factores de producción / Mercado laboral : Situación y agenda laboral (Inglés- 2007)
Factores de producción / Mercado laboral : Situación y agenda laboral (Inglés- 2007)
Factores de producción / Mercado laboral : Situación y agenda laboral (Inglés- 2007)
Factores de producción / Mercado laboral : Situación y agenda laboral (Inglés- 2007)
Factores de producción / Mercado laboral : Situación y agenda laboral (Inglés- 2007)
Factores de producción / Mercado laboral : Situación y agenda laboral (Inglés- 2007)
Factores de producción / Mercado laboral : Situación y agenda laboral (Inglés- 2007)
Factores de producción / Mercado laboral : Situación y agenda laboral (Inglés- 2007)
Factores de producción / Mercado laboral : Situación y agenda laboral (Inglés- 2007)
Factores de producción / Mercado laboral : Situación y agenda laboral (Inglés- 2007)
Factores de producción / Mercado laboral : Situación y agenda laboral (Inglés- 2007)
Factores de producción / Mercado laboral : Situación y agenda laboral (Inglés- 2007)
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Factores de producción / Mercado laboral : Situación y agenda laboral (Inglés- 2007)

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•No necesariamente el factor trabajo es más costoso en México que en otros países …

•No necesariamente el factor trabajo es más costoso en México que en otros países
•En términos de la liquidación, no es significativamente más costoso despedir trabajadores en México
•No hay ajustes vía salarios ni despidos, entonces el mercado reduce los empleos que puede generar
•Pocas actividades pueden cubrir costos de capital, lo que empeoró con la crisis.
•Los costos laborales han crecido a una tasa más veloz que la economía y en industrias específicas, las remuneraciones han crecido mucho más rápido que los ingresos

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  • 1. Employment and Competitiveness: Proposals of Public Policy May, 2007
  • 2. Today • Mexican labor market is a broken-down system. • The market prices (salaries) should send signals:  To the people, about where it is convenient to work  To the companies, about whom to hire and the best way to do it • The link between salaries and productivity is very weak. • Productivity is very low nn the Mexican economy.
  • 3. Today • Labor market and competitiveness • Proposal of labor policies
  • 4. In Mexico it is much more expensive and complicated to hire and fire workers than in other countries Rigidity indicators of the Mexican labor market 80 Mexico 70 60 Latin America 50 Index 0-100 & Caribbean 40 30 OECD 20 10 0 Difficulty to hire Source: “Doing Business in 2005”. World Bank and IFC.
  • 5. In Mexico it is much more expensive and complicated to hire and fire workers than in other countries Rigidity indicators of Mexican labor market 100 Mexico 90 80 70 Index 0-100 60 50 Latin America 40 & Caribbean OECD 30 20 10 0 Difficulty to fire Source: “Doing Business in 2005”. World Bank and IFC.
  • 6. In Mexico it is much more expensive and complicated to hire and fire workers than in other countries Rigidity indicators of Mexican labor market Index 0-100 Source: “Doing Business in 2005”. World Bank and IFC.
  • 7. In Mexico it is much more expensive and complicated to hire and fire workers than in other countries Rigidity indicators of Mexican labor market Weeks of salary Source: “Doing Business in 2005”. World Bank and IFC.
  • 8. The labor market can not be adjusted through salaries, so it adjusts by the number of jobs that it can generate Prices of work Salaries factor  Black market (informal sector)  Low creation of good quality Employment employments  Evasion of social security obligations
  • 9. The lack of flexibility of the labor market has caused an increase of an informal labor market (which is entirely flexible). Formal Sector (about 17 millions workers) Informal Sector (about 27 millons workers) S. Levy (2006).
  • 10. Economic and employment growth are negatively correlated Correlation coefficient of GDP growth with employment and worked hours
  • 11. More than 70% of the labor force works in sectors with productivity that is less than 25% of the US equivalent activity Relative productivity to laborla mano de obra Productividad relativa de force (Added Value / Economically Active Population of the sector) USA productivity in Productivity of the sectors in USA (2001) = 100 100.0% each sector 90.0% 80.0% 70.0% 60.0% Financial Transport and 50.0% Services Communication 40.0% Mining Electricity, Gas 30.0% Communal, Construction and Water Professional 20.0% and Commerce, 10.0% Personal restaurants Manufacture services and hotels Agriculture 0.0% 0.0% 20.0% 40.0% 60.0% 80.0% 100.0% Employment (Economically Active Population) Source: IMCO with data from the INEGI (2002), OIT (2001) y OECD (2001)
  • 12. The growth rate of the labor costs have grown with a quicker rate than the economy… 7.9% 5.5% 4.9% 5.2% 4.5% 4.38% 3.2% 2.90% 2.5% 2.57% 2.1% 1.73% 1.72% 1.35% 0.58% 0.55% 0.80% 1995 -0.2% 1997 1996 1998 1999 2000 2001 2002 2003 p/ 2004 -3.34% -22.9% Percentage growth of the real average salary perceptions Percentage growth of the productivity index
  • 13. Only 25% of the labor force is in activities that can cover capital costs, not exclusively labor costs. Sales growth adjusted by salaries’ growth, 1994-2006 Implicit cost of capital in 12 years (313.84%)
  • 14. The manufactures have lost dynamism and they have converted into expellers of workers 250% 200% Accumulated rate of workers absorption and expelltion 108,502 absorbed 235,209 expelled workers in the Workers (1994/01 same period al 2006/08) 150% 62 industries that create employment 137 industries that expelled workers In 12 years 100% Small companies / industrial sectors have expelled more workers 50% than the they have absorbed 700 900 1100 1300 0% -100 100 300 500 1994 - 2006 Large sectors with large Small sectors with small companies -50% companies -100% Thousands of workers Source: IMCO, with INEGI data, Encuesta Industrial Mensual (EIM) 1994 a 2006 Universe: 205 industries, 5 excluded because of data, 1.2 millons of workers (approximately 2.8% of the Economically Active Population)
  • 15. Today the service and informal sectors are an immense receptor buffer of workers ∆r ≈ 6.8% ∆≈2.9% ∆r ≈ -7.5% Source: INEGI-ENEU
  • 16. Common aspects of companies that create employment • Large Companies / sectors (automobile, bottling, pharmaceutical). • Capital intensive sectors. • Low wage costs as a percentage of the total added value. • Based on abundant natural resources with high international prices (ferrous materials, copper). • Derived from free trade (sales growth higher than 1000% can only be explained by the previous inexistence of the activity)
  • 17. Common aspects of industries in difficulties • The industries with the largest gaps between salaries and productivity are:  Non-competitive internationally, technologically backward, or that do not have a real market for their products any more  Those related to the agricultural / rural sector  Those with a Contrato Ley
  • 18. The incentives are not aligned for the companies to be the right size. ILLUSTRATIVE Each time a manufacturing company in the … it can only hire about 7% more formal sector doubles the size of its personnel sales… +100% +7% Employees Sales
  • 19. In simple words… • The industrial branches and companies that are successful in the market are those which can generate new employments. • The restrictions to the companies to lay off workers become restrictions to hire workers. • The salary rigidity makes workers unable to know in which sectors it is best to work. • As more restrictions are given to the formal sector, the growth of the informal sector will increase.
  • 20. Today • Labor market and competitiveness • Proposal of labor policies
  • 21. Proposals of labor public policies • The functions of the STPS should extend to all economic areas, and not only the formal manufacturing sector. • No control on salaries and lay-off quotas • Fixed severance payments for workers, matching the liability with an asset in companies’ balance sheets • Competence in labor unions, changes in the labor union leader, transparency and responsibility of the labor unions in regard the use of union fees • Change of vision on subsidies: they produce incentives for workers to stay in sectors of low productivity.
  • 22. Pensions and labor market • Separate the social security from the companies payroll changing to a universal and voluntary system. • Elimination of parallel regimes of social security which should evolve into a system with portability between sectors The reform to the ISSSTE law is a big step in this direction.
  • 23. Salaries and labor market • Alignment of wages and productivity • Hourly wages – more correlated with economic growth • Temporary hires and lay-offs, to sponsor growth with additional workers, not additional hours of few workers • Mandatory corporate profit sharing should evolve into a productivity bonus
  • 24. Thank you For more information: www.imco.org.mx

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