The Threat of Mexico's Massive Undergound Economy Fernando Chavez - WorldCrunch
go to original August 14, 2014

The shadow economy employed 60% of the population (Jorge Díaz)

MEXICO CITY — Informal, underground, black, "hidden." Economists have used a range of terms for economic activities that basically yield no taxes and don't contribute to bankrolling government services. Strictly speaking, the millions toiling this way in Mexico — and they account for more than half the workforce — are operating on the margins of the law and arguably working themselves into a social vacuum.

In fact, there is new data about the scale of Mexico's underground economy, providing insight into its evolution over the past decade. The research, from Mexico's National Institute of Statistics and Geography (INEGI), shows that the shadow economy accounted for 25% of GDP in 2012, and employed 60% of the working population, around 31 million people. This is clear evidence of a serious imbalance in the Mexican economy.

The government's free-market policies of recent years, efforts toward deregulation, and a dogmatic eagerness to make the employment market more flexible have all contributed to this state of affairs. These have been state policies for decades and have impacted the living conditions of millions of Mexicans.

With only four out of every 10 Mexicans having stable, formal jobs — and the rest living off the books — it's impossible to conclude that Mexico shelters its people instead of creating second- and third-class citizens. The figures effectively confirm the massive failure of public policies.

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