Kick-off Meeting of the Advisory Group for the OECD Guidelines for Measuring the Quality of Working Environment, OECD HQ, Paris, 8-9 December 2015

1. CASE STUDY 2: MEXICO
8-9 December 2015, Paris
Advisory Group for the Guidelines for Measuring the
Quality of Working Environment kick-off meeting

2. Contents
 The unemployment rate and its paradoxes.
 How the Mexican labor marker adjusts.
 ENOE: Mexico’s Labor Force Survey.
 Informal employment.
 Main concerns.

3. THE UNEMPLOYMENT RATE AND ITS
PARADOXES

4. Stylized facts
Population 119.7 M.
Labor force 52.6 M.
Net National
Income per Capita 15 282 ppp
15 biggest economy (usd)*
11 biggest economy (ppp)*
* IMF World Economic Outloock (WEIO), October, 2015.
Imports of goods
and services
Exports of goods
and services
33.5% GDP
32.6% GDP

5. OECD: Unemployment Ranking
Source: Harmonized unemployment rate, first quarter 2015, data extraction, November 5, 2015 from http://stats.oecd.org/.
0
2
4
6
8
10
12
14
16
18
20
22
24
26
28

6. 2
3
4
5
6
7
8
9
10
I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Mexico, national
Mexico, urban
United States
Unemployment rates: Mexico and the United States
Source: INEGI. Encuesta Nacional de Ocupación y Empleo (ENOE). Urban unemployment rate.
OECD. Harmonized unemployment rate, data extraction, November 5, 2015 from http://stats.oecd.org/.
4.6
5.5
6.9
Average
entire period

7. Deep heterogeneity/Deep regional differences

8. Source: INEGI, Encuesta Nacional de Ocupación y Empleo, second quarter 2015.
First quantile
Second quantile
Third quantile
Fourth quantile
Best situation (green)
Worst situation (red)
Informal Employment Rate
Unemployment Rate
Modern regions, backward regions and the
unemployment paradox

9. Unemployment and Informal employment rates
2005-2015 (shares on respect labor force)
3.5 3.1 3.3 3.4 5.1 5.2 5.2 4.8 5.0 4.9 4.3
57.3 57.2 56.0 56.3 56.4 56.8 56.1 56.8 55.9 54.7 55.3
0
10
20
30
40
50
60
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Source: INEGI. Encuesta Nacional de Ocupación y Empleo (ENOE). Data for the second quarter of each year.
Unemployment Informal employment

10. HOW THE MEXICAN LABOR MARKET
ADJUSTS (SO FAR)

11. How the Mexican labor market adjusts
(buffer and no buffer zones)
0 5 10 15 20 25 30
Millions
Open ended contracts
Fixed term contracts
Short term contracts
Informal employment
Unemployment
Emigration to the United States
Unskilled workforce Other forms of unskilled workforceSkilled workforce

12. 2005-2014 Accumulated Growth %
0.39
2.86
4.76
6.51
26.80
31.04
0 5 10 15 20 25 30
Salario mínimo real
Salario real promedio de cotización IMSS
Productividad por ocupado
Productividad por hora
Asalariados ENOE
Asegurados IMSS
Salaries, productivity and employment
Source: IMSS. Administered registers IMSS (data of 29/10/2015).
CONASAMI. Minimum wage data series (data of 29/10/2015).
INEGI. Índice Nacional de Precios al Consumidor. Índices de productividad (data of 03/11/2015). Encuesta Nacional de Ocupación y Empleo (data of 03/11/2015).
Formal employment
(private sector)
Wage employment (both
public and private sector)
Hourly productivity
Productivity per capita
Average real salaries
private sector
Minimum wage

13. Explains that Mexico’s labor
market is one adjusted more
in terms of prices than in
terms of quantities
Historical
salary lag
This has played an
important role in the
low level of the UR

14. incentives
Low salaries
The productivity level
of the economy as a
whole
Informal
employment
affecting

15. Low
productivity
High informal
employment
rates
Mexico’s labor market vicious cycle
Low salaries
Low
Unemployment
rates

16. ENOE: MEXICO'S LABOR FORCE
SURVEY

17. Mexico’s Key source on Labor Data:
LFS (ENOE by its Spanish acronym)
 Continuous household survey.
 Quarterly sample: 120 thousand dwellings (of a total 30 M.).
 Semi panel dwelling design (panel segmentation in fifths; one of
them is renewed each quarter after fifteen months in the sample).
 Sample domains. National (urban and rural); States (Provinces);
32 main cities.
 Data dissemination specified by calendar (day and hour).
₪ Monthly (preliminary).
₪ Quarterly (including domain disaggregation).
₪ Seasonally adjusted series (both monthly and quarterly).

18. ENOE’s contents
 Section 1 and 2 (Identification of main populations: labor
force and its components; non labor force and its
components)
 Section 3 (status in employment and working conditions)
 Section 4 ( information on some characteristics of the
economic unit the individual is working for)
 Section 5 (hours worked: duration, intensity, seasonality)
 Section 6 (labor income and social security coverage)
 Section 7 (secondary job)

19. ENOE’s contents
 Section 8 (employed persons in search for another job)
 Section 9 (no matter if the current situation of the individual is
employed or not, the section explores if the person the
current year or the previous had a job he/she no longer held
and why is this so)
 Section 10 (economic support different from labor income
coming either from family, social or public sources)
 Section 11 Non labor activities and amount of time devoted
to them during the reference week

20. S
E
C
T
I
O
N
T
R
H
E
E
Q3a
Q3bQ3h Q3c
Q3d
Q3g
Q3q
Q3r
Paid
workers
Non-paid
workers
SUBORDINATE
WORKERS
SELF EMPLOYED
WORKERS
Lone
own-account workers
Own-account workers
with contributing family
members & employers
Seniority or
equivalent
Go to
section 4
Q3i Union
membership
Q3j
Written contract
Q3k
Security in
employment
(contract
span of time)
Q3l Q3m
Work benefits
Not written
contract
Not work benefits
Childcare
working
leave

21. Q4
Q4a
Q4b
S
E
C
T
I
O
N
F
O
U
R*
*Labor market’s typology in terms on the SNA’s Institutional Sector Frame
Domestic workers
Industry
Go to
section 5
Farm employment
Q4c
Q4d
Q4e
Q4g
Q4f
Small but formal business
(family or own account)
Informal sector

22. Q5
S
E
C
T
I
O
N
F
I
V
E
Working in unsocial
hours
Go to
section 6
Q5bQ5a
Q5cQ5e
Low intensity at work
Absent from work
the last week
Normal intensity at work
Q5d
Q5c-Q5e
Working hours (both
customary and actual
last week)
Q5f
Reasons for working
either more or less
than customary
Q5g
Work
seasonality

23. Main indicators
 Participation rates.
 Unemployment.
 Underemployment.
 Informal employment (operating either within the informal sector
our outside it).
 Active pressure in the labor market (unemployed plus those
employed in search for another job).
 Working poor.

26. INFORMAL EMPLOYMENT

27. Informal employment
 The statistical approach of informal employment encompasses two
complementary perspectives:
1. The economic unit perspective established by the XV ICLS
(unincorporated non-registered enterprises of the household sector).
2. The labor conditions established by the XVII ICLS ( employment
modalities not eligible either de facto or de jure by labor schemes of social
protection).
 Informal employment encompasses the segment of both independent
and dependent employment with the highest economic risk exposure
because the way of their insertion in the labor market: one that do not
provide them the basic guarantees in their transactions either as self-
employed or as workers.

28. Hussmanns’ Matrix
Second quarter 2015 (million)
Classification
according to type
of economic unit
Classification by status in employment
TotalsPaid dependent workers
Employers
Own account
workers
Auxiliary
contributing
workers not
salary paidSalary workers
Dependent workers
not salary paid
Informal Formal Informal Formal Informal Formal Informal Formal Informal Formal Informal Formal
Informal sector 3.72 0.00 0.78 0.00 0.85 0.00 7.27 0.00 1.09 0.00 13.72 0.00
Paid domestic work 2.29 0.06 0.02 0.00 0.00 0.00 0.00 0.00 0.00 0.00 2.32 0.06
Corporations,
Government and
Institutions
5.43 17.89 0.88 0.20 0.00 0.95 0.00 1.46 0.65 0.00 6.97 20.50
Agricultural 2.38 0.32 0.16 0.02 0.00 0.32 2.57 0.00 1.00 0.00 6.10 0.67
Subtotal 13.82 18.28 1.85 0.23 0.85 1.28 9.84 1.46 2.74 0.00 29.10 21.24
Total 32.09 2.07 2.13 11.30 2.74 50.34
Note: Totals may not match with their components sum due rounding.

29. Non protected paid dependent
workers in formal economic units 8.85Non protected paid dependent
workers in formal economic units 8.85
Employed by the
household
sector
Non-protected paid dependent workers within the total
universe of informal employment (millions)
Note: Totals may not match with their components sum due rounding.
Source: INEGI, Encuesta Nacional de Ocupación y Empleo (ENOE), data for second quarter 2015.
Non-protected
employment
operating beyond the
informal sector
15.38
Informal employment
operating in the
informal sector
13.72
+
=
Total informal
employment
29.10
Subsistence own account farm
workers 2.57
Auxiliary contributing workers not
in the informal sector 1.65
Paid domestic workers 2.32
Paid dependent workers 4.50
Employers 0.85
Own account workers 7.27
Auxiliary contributing workers 1.09
4.22
15.67
Non protected
paid dependent
workers
9.21
29.10
=
=
+
+

30. Beware about informal employment
 Encompasses not just non modern modalities of labor insertion
but also modern ones.
 Worldwide is taking place an informalization process of labor
relationships (i.e. dependent contractors).
 Informal employment is not any longer an issue concerning just
developing/emerging economies; it is also a phenomenon
developed countries’ labor statistics should detect in a context of
deconstruction of their own welfare states.

33. MAIN CONCERNS

34. Mexican policy makers’ main concerns
 Reduce both manifestations of informality:
a) informal sector.
b) non-protected employment.
 Increase flexibility within formal labor market.
 Increase labor productivity.
 Another approaches on quality on employment not connected with
points above have not sink in well yet.

35. Mexico’s NSO (INEGI) main challenges and concerns
 To implement the XIX ICLS (2013) recommendations.
 Some implications of the XIX ICLS demands dealing not any
longer with proxy respondents but necessarily with direct
respondents. This may have many implications in field operations
costs and even in terms of sample design.
 To implement the modifications demanded by ICSE revision which
may affect questionnaire design contents.
 A clear understanding on what issues have to be incorporated to
the current content of the LFS and which ones ought to be solved
by a modular approach and with which periodicity.
 Respondent’s attrition.

36. ANNEX:
ENOE TRANSLATION (SORT OF)

44. Thank you
for
remaining
awake !