Background on the Mexican Institute of Social Security (IMSS)
The Mexican Institute of Social Security (IMSS) reported the highest growth in formal employment in history, with 1.2 million more people registered. This figure is attributed to the pilot program for the affiliation of workers from digital platforms, but excluding this effect, the formal job creation remains weak, according to BBVA Research’s analysis.
Who is IMSS and why is it relevant?
The Instituto Mexicano del Seguro Social (IMSS) is Mexico’s social security organization, responsible for administering pensions, healthcare, and other social programs. It plays a crucial role in ensuring workers’ rights and providing social security coverage to millions of Mexican employees.
The App Jobs Phenomenon
The recent surge in formal employment is partly due to the inclusion of app-based workers into the IMSS system. This move aims to extend social security coverage to gig economy workers, such as those employed by ride-hailing or food delivery services.
What does this mean for app-based workers?
Workers who earn less than the minimum wage through app-based jobs will still receive protection against workplace accidents, even though they won’t have full IMSS coverage. This partial coverage ensures that these workers are not left entirely unprotected in the event of work-related incidents.
Analyzing the Job Market
BBVA Research clarifies that this growth does not signify an improvement in the formal job market’s dynamics. Instead, it reflects existing jobs being integrated into the IMSS registry rather than new job creations.
Key Questions and Answers
- Q: What does the record-breaking formal employment growth signify? The growth is largely due to the inclusion of app-based workers into the IMSS system, not necessarily an increase in new formal jobs.
- Q: How does this affect app-based workers earning below the minimum wage? These workers will still have partial protection against workplace accidents, though they won’t receive full IMSS coverage.
- Q: Is this a genuine improvement in the formal job market? No, this growth does not indicate a robust formal job market; it mainly reflects existing jobs being registered under IMSS.
Context and Impact
The Mexican government’s efforts to formalize the gig economy through the IMSS are commendable, as they aim to extend social security coverage to a previously underserved workforce. However, the recent surge in formal employment registration should not be mistaken for a thriving job market. The underlying weakness in formal job creation remains a concern.
As the app-based workforce grows, it’s essential to address the challenges these workers face, such as low and inconsistent incomes. Policymakers should consider additional measures to support this sector’s development, ensuring that workers have access to social security benefits and a stable income.
