Informal economy swells as workers try to survive

Mexico City: The ranks of sidewalk vendors, house cleaners and street-corner cooks are swelling in Latin America's No. 2 economy as out-of-work Mexicans turn to uncertain jobs to survive through a slow economic recovery.

"If there was real work, we wouldn't be here," said Francisco Orozco, pointing to a street lined with fellow vendors, shoe shine stalls, guitar players and makeshift news stands in Mexico City.

Mexico is limping back from its deepest recession since 1932 after its economy contracted 6.5 per cent in 2009.

While the overall unemployment rate has floated roughly between 5 and 6 per cent in the past 18 months, the share of Mexicans labouring in the informal sector has climbed, according to the national statistics agency.

There were 660,000 more Mexican workers in the informal sector at the end of June than there were at the same point last year, pointing to a weakness that could ultimately slow the country's economic recovery.

Poorly-paid

While poorly-paid workers in the cash economy can count themselves as employed, analysts say Mexico will not attain full economic health while a large share of those workers remain shut out of factories, offices and large enterprises that offer stability and benefits that can fuel consumption.

"Labour conditions have not improved and the jobs being created are not of the highest quality," said Arturo Vieyra, an economist with Banamex.

The share of workers in the informal sector has increased from 28.1 per cent in the second quarter of 2009 to 28.8 per cent by the middle of this year. The figure should touch 30 per cent before they peak, said Vieyra.

Mexico's informal economy is more fluid than the factories, offices and other brick and mortar businesses with a relatively fixed workforce.