The majority of workers, at least 60 percent, in Mexico have informal jobs. That typically means seven-day work-weeks and no rights such as social security or retirement pensions.
Mexico, the country with the longest average working hours in the world, passed a labor reform early last month extending annual paid vacation from 6 to 12 days. However, most workers won’t benefit from the change, because they don’t have contracts.
The International Labour Organization estimates that worldwide, about 2 billion people are informal workers, and 93 percent of those are in the Global South.
In Mexico, sales, agriculture and manufacturing are the sectors with the largest numbers of informal workers. Some 85.4 percent of clothing businesses are informal. The consequences of this are far-reaching because poverty isn’t just expressed through a low daily income but through the precariousness and vulnerability of not having a guaranteed income. Informal work is unsafe, as workers are unable to defend themselves from abuse and their workplaces are often undefined or small and hazardous.
The most common informal job is selling goods or food from street stalls, in markets, or on buses and trains. And while these markets are essential for the poorer classes because they provide basic foods and meals at much cheaper prices than Walmart and shopping centers, they regularly face repression from local governments who want to remove them in order to cater to the upper classes and to tourists from wealthy countries.
Food deliverers in Mexico earn a median of pesos ($2.02) an hour, and work an average of 46 hours a week. A survey conducted late last year found that people who delivered via apps paid a higher percentage of their income (8 percent) in taxes than the biggest companies in Mexico (with manufacturing and pharmaceutical companies paying 1.2 to 5 percent). But while the deliverers pay taxes, they don’t get social security, and the companies don’t comply with the legal requirement to provide them with the equipment they need to work, nor accident insurance.
Uber’s profits depend on avoiding paying formal work benefits. If the two founders of Uber, Garrett Camp and Travis Kalanick, paid 3.5 percent of their wealth to social security in Mexico, the country’s food deliverers would have access to it for five years.
Because informal workers are more exposed to risks and shocks than formal workers — including policy that is biased against them, shifts in demand, prices and inflation, and occupational health risks — they are more likely to develop physical and mental health problems. In a study on workers in Latin America, it was found that informal workers have a 27 percent higher prevalence of depressive symptoms, and studies have found that only strong welfare states with services available to everyone can soften the physical health inequality between the two workforces.
The high levels of informal employment in Mexico are an unstated but deliberate policy aimed at increasing profits for local and U.S. businesses. The North American Free Trade Agreement (NAFTA), and other neoliberal policies prompted huge migrations from rural areas to the cities in the 1990s, as the U.S. sent its subsidized corn to Mexico and local small businesses were ruined. With little work available in the cities, people had to sell goods on the streets in order to survive.
Mexico’s minimum wage decreased from 1980 through 2000, as the country was pressured to remain “competitive” for “investment” from U.S. companies — that is, to keep wages as low as possible so that transnationals could use Mexico to increase their profits. Adjusting for purchasing power and inflation, in 1979, the minimum daily wage was 330 pesos ($16.89), while in 2000 it was 90 pesos ($4.61). This imposed poverty caused the amount of informal work to increase.
Many industries in Mexico and the Global South depend on informal work. The apparel industry uses home-based garment workers paid by piece in order to offload the monetary risk of fluctuating demand on to them, as well as the non-wage costs of production like machinery and electricity.