Analysis: Mexico’s labor reform no panacea for denting the black market

Juan Ramirez makes up to $42 a week selling candy,newspapers and other items from his street kiosk, but he’s not interested in anew Mexican law that aims to bring millions of workers out of the country’sinformal economy.

“I don’t think it is going to benefit companies orworkers,” said Ramirez, who has scraped together a living on the samestreet corner for nearly three decades, working 72 hours a week.

Low company salaries and his own lack of academic credentialswould keep him there, he said.

The 46-year-old is one of at least 14 million informal workersin Mexico and policymakers hope the new law, which went into effect lastweekend, will entice at least some of them into formal positions by creating upto 400,000 jobs a year.

But many companies, workers and lawyers say thelaw creates scant incentives for employers to boost hiring and offers little todraw workers out of the informal sector, where selling gum, moonshine or waterat traffic lights or on the beach can often make more money than working inlow-paid formal jobs – and also escapes taxes.

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