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Informality increases in CDMX: more than 2 million people work without social security – El Sol de México

The informal economy in Mexico City (CdMx) grew 3.9 percent at an annual rate in the second quarter of 2023, marking a historical maximum, driven mainly by sectors such as commerce, professional, scientific and technical services.

According to the Measurements of the Quarterly Informal Economy by Federal Entity (MEITEF), the informal economy in the country’s capital reached 589 thousand 284 million pesos from April to June, its highest level since there are data, that is, since 2005.

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With this, the CdMx is the second entity that contributed the most to the Gross Domestic Product of said period (3.1 percent annually), with 0.40 percentage points, only surpassed by the State of Mexico, which contributed 0.69 percentage points to its growth, indicate the data from the National Institute of Statistics and Geography (Inegi).

In this way, the population employed in the informal sector rose to 2.19 million in the third quarter, an increase of 1.06 percent annually, indicates the National Occupation and Employment Survey (ENOE).

Economists consulted by El Sol de México commented that by having a higher level of informality, more people are without social security, that is, they do not contribute to the IMSS or ISSSTE, they do not save for their retirement nor do they have access to a loan from Infonavit. .

“These high levels of informal activity represent a great problem for the country, since these activities tend to be those with the lowest productivity, people do not have social security nor access to formal credit in the economy; which limits their opportunities,” said Mario Correa, independent economist and former director of Scotiabank.

He added that high levels of informality are usually explained by high regulatory or tax burdens on formal activities, that is, it is cheaper for companies to have their workers in the informal sector than to register them with the IMSS and pay labor rights.

Miguel González, coordinator of the Center for Financial Studies and Public Finance (CEFI) of the UNAM, assured that the increase in the informal economy has an impact on productivity, which generates low income and therefore, the government collects fewer resources to allocate them to priority sectors such as health, education and public investment.

Trade dominates the informal economy

Within the informal economy, the commerce sector is the one that generates the greatest added value with 42 percent of the total. This subsector contains all types of retail sales in different modalities such as small or local businesses, street stalls, street vendors, etc.

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The professional, scientific and technical services segment is the second most important in the informal economy, since it contributes 11.7 percent of the total. Third place is the construction sector, which produces 8.69 percent of the total informal economy.

Other sectors in which economic activities occur informally are transportation, postal and warehousing, financial and insurance services, and manufacturing. González explained that commerce drives the informal economy because it implies fewer capital requirements to be able to start working. “Services are fueling the informal economy because you need less working capital and less infrastructure to start a business.”

2023-12-05 11:00:00
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