Employment, structural adjustment and sustainable growth in Mexico

The impact of slow growth since the early 1980s on the Mexican labour market is analysed by comparing Mexico's employment performance to that of other OECD countries through three different components, that is, the labour force participation ratio, occupational structure and output per worker. The 'old' employment components of Mexico's development problem — low participation ratios and a high employment share of agriculture — have remained, to which is added a new employment problem in the form of a massive increase in underemployment in the tertiary sectors of the economy driving down wages for a large part of the population. This article raises two sets of questions. First, given the current employment problems and the prospective expansion of the labour force, what are the output and employment growth rates, and the related pattern of structural change, required to prevent a worsening of underemployment and income distribution? Second, given Mexico's debt problems since the early 1980s, what is the output growth rate that would make the path of the debt-output ratio sustainable over time? And how do these growth prospects compare to the investment and external finance requirements associated to a socially necessary growth rate?