The other economy

A street market in the center of Mexico City, in January.Mario Jasso / Cuartoscuro

Mexico has two rhythms.

We have modern Mexico, typically located in the center and north of the country, where formality, growth and development converge, but there is also the Mexico of the south, with poverty, informality and lag in practically any of the usual economic variables. .

The difference between formality and informality of employment lies in the assignment that the employer —or the employer— gives to his employees through the recognition of the employment relationship through the payment of social security. The states in which there is less labor informality are Chihuahua and Nuevo León, with a percentage of 29.7% and 33.8% respectively. Formality in employment is not mere coincidence or geographical chance. The states most closely linked to the productive chains of the United States and Canada, for regulatory and compliance reasons, have higher labor standards than those in the south. In contrast, the highest informality rates are found in Oaxaca, where 73.9% of the employed population has no affiliation to the social security systems, and Guerrero, a state that is deeply lagging behind,with almost 70% of its workers in the informal sector.

More information

• 'Gas Bienestar: another movie we already saw', by Valeria Moy

These definitions and these ways of categorizing the different population groups help some of us to understand market failures and try to make proposals for improvement.

But for people who are looking to earn a living from day to day, the definitions are not very relevant.

The pandemic, in labor matters, has hit women more.

They are - regardless of our opinion on the matter - those who are largely responsible for the care of the home and especially the care of children and the elderly.

According to recent data from Inegi, men dedicate 20 hours a week to taking care of the home and women more than 50, an additional workday each day and this has only increased in the months of confinement.

But the north-south division does not serve to explain other phenomena in our economy, dynamics that occur regardless of geography and even regulatory frameworks. And on which the concept "informality" falls short, such as the "nenis".

They have always existed, but the pandemic gave them the spotlight that they had not had before. The "nenis", that term between contemptuous and friendly, have covered the economic needs of millions of families. The acronym, in theory, stands for "new internet business entrepreneurs." But the internet sounds too sophisticated, in fact they are women who use social networks or messaging applications, such as WhatsApp, to offer products - clothes, shoes, food, gifts - that they deliver at an intermediate point between the buyer and the seller. In conclusion: they are entrepreneurs, traders who put their capital and resources at risk to satisfy a demand in the market.

Usually these entrepreneurs move in informality. All the incentives are there to make it so. Transactions are made in cash, there is no control, there are no procedures to do, wasting days trying to register and becoming victims of extortion by the various public officials in charge of the various stages of the formalization processes. Better they agree with the buyer through an acquaintance or a WhatsApp group, they coordinate the delivery at the exit of a Metro station; the payment is made in cash and they forge relationships beyond a Federal Taxpayers Registry. As in any underground economy, the numbers are rugged. The records are estimates and we can only assume the magnitude of this type of economy. But we cannot deny that it exists.

The Mexican Institute for Competitiveness, IMCO, has taken on the task of understanding this phenomenon. How are these entrepreneurs? What level of education do they have? What is your profile? We know that, in general, they are married women, with one or two children, between 25 and 44 years old, studied until high school, and have little or no training in finance or accounting. And they number in the millions. With the official information, from Inegi, we can know that there are around four and a half million women who undertake in the informal sector and that eight out of 10 entrepreneurs are informal. Perhaps not all of them fall within the definition of “nenis”, but they have undoubtedly been an economic support for their families, with an even more relevant role in the months of pandemic in which women have had to stay at home to care for their children. family,but working at the same time. For the "nenis" there are no working hours or benefits or vacation days. They work when they can and how much they can.

Informality has several edges. On the one hand, the savings in paperwork and inspection associated with formalization represents an incentive to stay in it, but informality also has costs. Women who manage to formalize their enterprises have an income three times higher than that of women who remain in the informal sector. In addition, in formality they would have more access to credit, training and the possibilities of growing their businesses. But the definitions are becoming more and more imprecise. One can undertake in informality having a formal job or qualify as informal despite working more than one traditional working day.

As always, indexes and metrics are slower than reality.

The labor market is moving, it is transformed, it accommodates itself to the covid and to the dynamics of families.

He does not wait for IMSS records or Inegi surveys.

This informal labor market, where the “nenis” are, is becoming increasingly important.

It is the other economy that supports millions of families in the country.

What we must adjust are our metrics, our surveys, but, above all, our social security system.

It is a discussion that can no longer wait.

Subscribe here

to the

newsletter

of EL PAÍS México and receive all the informative keys of the current situation of this country