Simply Economics, from Mexico

China’s Platform Economy Plans, Mexico’s Formal Employment Losses Continue

China aims to promote the sustained and healthy development of the online platform economy. Mexico sees two months of formal employment losses in June. Gain valuable insights into China's strategic plans for economic development and the impact of job losses on the Mexican economy.Sources:https://www.elpais.cr/2024/07/05/china-promovera-desarrollo-sostenido-y-saludable-de-economia-de-plataformas-en-linea/https://www.forbes.com.mx/mexico-hila-en-junio-dos-meses-con-perdidas-de-empleo-formal/Outline:(00:00:00) Introduction(00:00:41) China to promote sustained and healthy development of online platform economy(00:02:45) Mexico has seen two months of formal employment losses in June

Duration:: 6m
Broadcast on:: 06 Jul 2024
Audio Format:: mp3

China aims to promote the sustained and healthy development of the online platform economy. Mexico sees two months of formal employment losses in June. Gain valuable insights into China's strategic plans for economic development and the impact of job losses on the Mexican economy.

Sources:
https://www.elpais.cr/2024/07/05/china-promovera-desarrollo-sostenido-y-saludable-de-economia-de-plataformas-en-linea/
https://www.forbes.com.mx/mexico-hila-en-junio-dos-meses-con-perdidas-de-empleo-formal/

Outline:
(00:00:00) Introduction
(00:00:41) China to promote sustained and healthy development of online platform economy
(00:02:45) Mexico has seen two months of formal employment losses in June

Good morning, and welcome to Simply Economics from Mexico. It's Saturday, July 6th. On today's show, China aims to promote the sustained and healthy development of the online platform economy, while Mexico experiences two months of formal employment losses in June. Plus, stay tuned for more economic news from Mexico. This coverage and more, up next. I'm David, and you're listening to Simply Economics from Mexico. We start off with news from China, where steps are being taken to further enhance the innovation capabilities of platform enterprises and foster the sustained and healthy development of the online economy. This was discussed at a recent executive meeting of the State Council chaired by Premier Li Chiang. For more on this, we turn to our correspondent. Can you give us some background on what exactly the platform economy refers to in this context? The platform economy generally refers to technology-driven online marketplaces and similar operations, such as app-based passenger transportation and food delivery services. These digital platforms have become an increasingly important part of China's economy in recent years. The government sees fostering the deep integration of digital technology with traditional industries as essential for driving economic and social development going forward. And what specific measures were discussed at the State Council meeting to support the development of the platform economy? The meeting emphasized the need to persistently improve the ecosystem for the digital economy to flourish. This includes enhancing the foundational frameworks of data and digital infrastructure in a coordinated manner, while also advancing market-based data allocation as a key economic input. Basically, creating the underlying conditions for platform enterprises to continue to innovate and grow, were any other notable topics discussed at the meeting beyond the platform economy? Yes, the meeting also touched on a few other important areas. There was discussion of promoting innovative pharmaceuticals through policies related to pricing, insurance payments and fostering scientific research. Supporting the development of China's western regions was another key topic, given their fundamental role in national reform and stability. And specific mention was made of advancing reform in Tianjin's Bin Hai new area to develop it as a pilot free trade zone. It certainly sounds like a wide-ranging meeting with many important topics on the agenda for China's economic development. Thank you for that update and analysis of the key points from the State Council executive meeting. Shifting our focus to another economy, Mexico saw two straight months of formal job losses in June, with 29,555 positions eliminated according to the Mexican Social Security Institute or IMSS. This marks the deepest job cuts for June since 2020 during the height of the COVID-19 pandemic. In May, over 25,000 formal jobs were also lost. Despite this, IMSS still registered a net gain of nearly 300,000 positions in the first half of the year. For more on this, we turn to our economics correspondent. What can you tell us about the sectors and regions most impacted by these job losses? The IMSS data shows that even with the recent downturn, total formal employment in Mexico still grew 2% year over year as of June to reach over 22.3 million positions. However, the pace of job creation has clearly slowed in recent months. The economic sectors that saw the strongest annual growth were transportation and communications at 5.6%, commerce at 3.6%, and construction at 3%. Regionally, the states of Chiapas, Hidalgo, and state of Mexico stood out with increases above 4%. So while there are still pockets of strength, the overall labor market appears to be softening. And what about wages? Has the job market slowdown impacted salary growth at all? Interestingly, average salaries have continued rising at a solid pace despite the weaker job numbers. IMSS reported that the average daily salary reached 584.9 pesos in June, a 6% nominal increase from a year earlier. In fact, this was the third highest jump for a June month in the last 23 years. Since January 2019, base contribution salaries have maintained annual increases of 6% or more when measured in nominal terms. So at least, for those workers who have held onto their jobs, compensation is still rising at a healthy clip, likely due in part to elevated inflation. Lastly, while these IMS figures are seen as the main indicator for formal employment in Mexico, don't they only tell part of the story when it comes to the overall labor market? That's right. It's important to keep in mind that IMS-S only captures data for salaried workers affiliated with the agency. But according to figures from Mexico's statistics agency, Enagi, nearly 55% of the country's labor force is actually in the informal sector. So the IMS-S numbers, while still useful and closely watched, don't necessarily provide a complete picture. With signs that economic growth may be slowing, it will be important to monitor a range of employment indicators in the coming months to gauge the health of the overall labor market. Thanks for that context and analysis. We'll continue to track the latest developments in employment and the broader Mexican economy. And with that, we wrap up our stories for today. Thanks for listening to Simply Economics from Mexico. We'll see you back here tomorrow. [MUSIC] You