Weekly Report - 29 July 2003

President Vicente Fox was forced to admit that unemployment had become a 'serious' problem when June statistics showed the rate up to 3.17 in that month. This is the highest level in 18 months and more than one-and-a-half times the rate Fox encountered when he took office. 

If the figure looks small by comparison with other Latin American countries, it is because of the tight definition of unemployment in Mexico. To be classified as unemployed one must be over 12, looking for work, without having had even one hour of paid employment in the week of the survey. 

During his election campaign in 2000, Fox promised economic growth of 7% a year and the creation of more than 1m jobs in each of the six years of his presidency. 

Taking the official figures as reference, since Fox took office more than half a million people have become unemployed, taking the total to 1.3m. A better indication of the real situation is provided by the estimated 9.5m-strong informal or 'submerged' economy; 17.3% of the economically active population earning less than a living wage. 

After recognising the seriousness of the problem, Fox promised increase spending on training. The problem is, as the business sector pointed out, the amount of money the government is prepared to commit, M$100m (US$9.6m), is too little to make much of a difference. The business sector and opposition politicians want the government to come up with a more comprehensive, 'structural' response. They say that the M$100m will provide training for just 25,000 people. 

Officials say that the June figure is inflated by the end of the academic year and the cancellation of public works projects in five cities, and that they have been distorted by a surge in joblessness amongst women. 

The big problem has been feeble economic growth: this year will be the best of Fox's first three years, but it will probably be less than 2%. Fox's first year, 2001, was a recession (-0.3%) and last year was a disappointing 0.9%.