Calderon Administration Struggles to Fulfill Jobs Promise

MEXICO CITY — Cesar Mora has been looking for steady work for three frustrating years since he graduated with a degree in applied mathematics from Mexico's National Autonomous University.

He's gone to countless interviews alongside an army of young people competing for the precious few jobs in the nation's biggest city. He's watched his college buddies resort to selling software in Mexico's pirate markets to survive. Mora, now 30, lives with his parents, does odd jobs like fixing computers and wonders if his career will ever start.

"It's sad, but it's the reality here," Mora said. "The diploma is just for pride. ... Companies here don't need workers."

Mora is yet another victim of the grinding job market in Mexico, which hasn't created enough jobs for its people in more than two decades. Mexico's inability to create jobs has sent college graduates and rural farmers alike across the border or into the nation's vast informal sector, where they sell tacos at intersections or bootleg DVDs without paying taxes or receiving social security.

Of the 44 million economically active Mexicans, only an estimated 15 million have formal jobs with state-mandated benefits and social security. The situation is particularly acute among the nation's youth: More than 40 percent of Mexicans aged 15 to 24 can't find a job, according to the nonprofit group Young Entrepreneurs for Mexico.

A year ago, President Felipe Calderon campaigned as the "Candidate of Jobs," promising what no Mexican president in 25 years has been able to deliver: to create enough jobs for its people.

But as Calderon nears his first year in office on Dec. 1, his administration's record on job creation is shrouded in mystery and controversy.

Leftist critics say Calderon has yet to create the promised jobs and blast his first efforts as disasters. Conservative economists and government officials tend to see Calderon's efforts as bearing fruit.

Last month, Calderon bragged that his job creation efforts have resulted in 825,000 new jobs through Oct. 15, more than 30 percent ahead of even the government's optimistic projections.

Yet few in Mexico put much stock in those numbers. More than half the new jobs are temporary, and government statistics are notorious for reflecting a decidedly rose-colored version of reality (Mexico's official unemployment rate of 3.8 percent is often dismissed as greatly distorted.)

Mexico's job challenge is frightening: The country needs about 1.3 million new jobs annually just to make room for young people entering the workforce each year. That does not account for the estimated 27 million underemployed and unemployed Mexicans, millions of whom have fled across the border in search of work. The maquiladora industry, once considered the panacea for Mexico's job woes, has suffered in recent years as factories moved to China and Central America; it now employs fewer Mexicans than it did in 2000.

Most analysts agree Mexico needs about 6 percent annual economic growth to reach its job creation target. This year, Mexico'?s economy is on pace to grow by 2.9 percent, among the lowest rates in Latin America. Government estimates are for around 5 percent growth by the end of Calderon's term in 2012.

Such numbers mean little to Yolanda Mendez, a 40-year-old divorced mother of five, who hasn't seen opportunities grow during Calderon's first year in office. Mendez sells pre-paid cell phone cards at an intersection in southern Mexico City, taking home about $35 a week in salary and another $2 to $20 a day in commissions.

"For a long time I looked for a different job, but places were giving me work for minimum wage, for 10 hours a day and without social security," she said. "Working in the street in the middle of buses and cars isn't easy. I get sore throats a lot and almost every day I get headaches."

Analysts say Calderon doesn't want the government to directly fuel job growth. Rather, he is focused on creating the conditions to allow private investment to thrive, creating jobs in the process.

"The strategy of the government is to maintain stable macroeconomic factors," said Ernesto Cervera, an economist with the conservative Mexico City GEA think tank. "But you have to sustain it. There have been years in the past that we've seen one million (new) jobs, but you have to continue it and right now we have the conditions for sustaining that type of growth."

The Calderon administration says investment, mostly foreign, reached more than $13 billion in the first half of 2007, nearly 40 percent more than the same period in 2006. Most goes to the tourism, transportation and construction industries.

"The investors are reflecting a great confidence in the country, in terms of what this government has shown in political maturity, negotiation with opposition political parties, with an electoral reform, a fiscal reform, reforms to government pensions and social security," said Omar Rodriguez, director of labor policy for the Calderon administration.

The Calderon government also trumpets its anti-narco strategy – it sent more than 20,000 soldiers to confront increasingly violent drug cartels – in making the country more attractive to investors. "That is also part of the jobs policy," Rodriguez said. And Calderon wants college degrees to better match the needs of emerging businesses, especially in the realm of technology.

But critics, especially those who oppose the neo-liberal path Mexico embarked upon in the 1980s, say the government lacks a coherent job creation strategy and has abdicated its role in the process.

"Private companies aren't looking out for the development of nations," argued Javier Aguilar Garcia, an economist at Mexico's National Autonomous University. "They are looking to generate profits, not jobs. Their logic is a different one."

Both big business and entrenched unions in Mexico also get blamed for the nation's stagnating workforce: Monopolistic companies like Telmex, the Carlos Slim-owned company which controls 94 percent of the country's fixed telephone lines, have little incentive to offer competitive salaries, analysts say. And unions get blamed for squeezing new jobs because hard-won worker benefits, like generous pensions and severance packages, make it too expensive for many smaller firms to hire new workers.

"The labor code tries to protect the worker, but it has become too stiff and generates all kinds of perverse results," said economist Robert Duval Hernandez of the Mexican research center CIDE. "It has become so costly to hire and also to fire workers that we have businesses hiring under the table (without benefits), hiring temporary workers or simply hiring a smaller number of workers."

Conservatives in Mexico have long dreamed of reforming Mexico´s union-friendly labor laws and the issue is shaping up as one of the defining battles of Calderon's term.

Rodriguez said labor reform accounts for a large chunk of Calderon's jobs strategy, although the government has made some halting attempts to generate jobs directly. The highly touted First Job program, which sought to create new jobs for first time job seekers by assuming the burden of social security taxes for employers, fell far below expectations. The program has only spurred the creation of about 7,000 new jobs, in large part because employers are balking at the other costs, like pensions and severance pay, that come with formally hiring a worker. Even supporters of Calderon have labeled the program a failure.

Calderon has also launched other programs aimed at stimulating employment, most notably a microcredit effort to help Mexicans start small businesses. He hopes to boost the number of microcredits — small loans of around $100 — to 3 million by 2012.

During the campaign Calderon also talked of encouraging continent-wide investment in infrastructure in states like Michoacan that send large numbers of migrants north. Although the U.S. has pledged $1.4 billion to help Mexico combat drug cartels, nothing has been publicly disclosed regarding such potential development aid.

Many analysts expect explosive growth in Mexico. For instance, the Goldman Sachs investment firm predicts Mexico will have the world's sixth largest economy by 2050.

But the growth spurt appears to be 10 or even 20 years away.

That's little solace for people like Mora, who has been hunting for a job for three years. "I'll be 40 years old then and it will be even harder to get a job," he said. "I need to take advantage of things now, while I still have the strength."