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Unemployment Benefits in Mexico City

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Unemployment rates in México City are officially around 3.7%. Underemployment runs as high as 25%. Due in large part to its statistical methodology and massive informal economy, Mexico consistently registers incorrect low unemployment figures. The unemployment rate among “economically active” people between the ages of 20 and 24 reached 4.9% during the first quarter of 2005. That is a much higher rate than the 2.8% registered for the population as a whole. Young Mexicans are the segment of the population that is most affected, suffering unemployment rates twice as high as those among adults. Surprisingly, better-educated professionals have the highest unemployment rate.

Government efforts to raise educational levels in order to promote economic development have failed. Some people blame the neo-liberal economic model, claiming it puts too high a priority on price stability, limits investment, restricts wage growth, and makes conditions even more precarious for the unemployed – a situation that has forced the government to permit indiscriminate growth in the informal, underground economy. Still other critics cite increased emigration to the United States as proof of Mexico’s inability to generate the jobs that people demand. For more facts and figures on unemployment:

Part of this underground market of trade goes on right in the streets. Most mornings skilled tradesmen of all ages sit on the sidewalk along México City’s Metropolitan Cathedral. They set down their toolkits and lay out colorful hand-painted placards reading “electrician,” “bricklayer,” “plumber,” and “painter.” These unemployed workers wait for someone to come by and hire them for short-term work, and spend the rest of the day chatting with the rest of the unemployed.

Mexican Social Security Institute pays an unemployment benefit of between 75% and 95% of the old-age pension for unemployed persons aged 60 to 64 (the benefit is paid under Old Age, Disability, and Survivors). Labor law requires employers to pay dismissed employees a lump sum equal to 3 months' pay plus 20 days' pay for each year of service. Unemployed persons may withdraw an amount equal to 65 days of earnings in the last 250 weeks of contributions or 10% of the individual account balance, whichever is lower, after 46 consecutive days of unemployment. One withdrawal is permitted every 5 years.

Update 6/09/2008


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