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What's driving such steady employment growth in Mexico?

11 Jun 2015

Mexico continues to be one of the hottest markets on the planet, and according to Bloomberg, new unemployment numbers are the lowest reported since October of 2008.

Consumer behavior impacts employment numbers
Retail sales in Mexico waned after tax increases in 2013 introduced new pressures on incomes. However, new employment opportunities are chipping away at those losses. Mexican workers increasingly enter the workforce, and The Offshore Group is part of that effort, assembling teams of talented, motivated workers in manufacturing communities across the country. As the market improves, consumer purchasing goes up. The trend of improving retail sales bolsters employment in return.

Employment growth tied to investment in education
It may seem that low unemployment rates could cause trouble for U.S. producers looking to Mexico for nearshore manufacturing resources. However, that's far from the case. With just under 60 percent of eligible participants engaged in the workforce, there's still plenty of room for employment growth. Bloomberg reports Bank of America's chief Mexico economist thinks there is still slack left in the improving labor market. There is plenty of room for continued improvement before we start to see downward pressure on Mexico's labor markets.

Mexico as a whole is starting to put more emphasis on education. In fact, the amount of people enrolled in higher education just about doubled from 1990 to 2010. Employment and recovering retail sales aren't the only ingredients in the mix for Mexico's economic growth.

A strong, hungry labor market is certainly a reason to look to Mexico for investment and growth. However, employment and recovering retail sales aren't the only ingredients in the mix. Mexico is making wise choices and investing in its workers.

Late last year, U.S. News & World Report published census data for changes in education levels for the Mexican population at or above 15 years of age. Note that this is the same age used for employment statistics. Census data show a marked increase at all levels of education. Specifically, for Census Years 1990 and 2010:

  • Basic education increased from 56.7 to 61.9 percent
  • Upper secondary education increased from 14.3 to 19.3 percent
  • Higher education nearly doubled, moving from 8.3 to 16.5 percent
  • The percentage of Mexico's uneducated population was cut nearly in half, dropping from 13.4 to 6.9 percent

Many emerging markets benefit from governmental organizations that promise reform and change. In Mexico, those changes have been put in place over the last several decades, and we are already seeing the results. The workforce is increasingly educated, they've had a taste of success and are hungry for more.

The time is right to invest in Mexico
Mexico is changing the global manufacturing landscape. Strong employment numbers and investments in education and workforce development are paying off. Now is the time to build relationships with nearshore providers. Bloomberg reports that Banco de México, the central bank of Mexico, has cut interest rates back to a record-low of 3 percent. 

Current conditions support infrastructure development. The Offshore Group has responded, establishing manufacturing communities that tie Mexico's growing workforce to the production needs of domestic U.S. companies.

The Offshore Group: You manufacture ... We do the rest.

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