Not enough well-paid, formal jobs have been created for Mexicans over the past decade, as growth rates averaged at 2 percent in the same period. In turn, this has kept inequality stubbornly high. Although the unemployment rate is relatively low at about 5 percent, nearly one-third of jobs are in the informal sector, which makes the new middle class vulnerable.
Alfredo Coutiño, Latin America director at Moody’s Economy.com, says it will take five major structural reforms to improve production capacity: labor, financial, educational, fiscal, and energy. Those reforms, he says, would increase foreign investment – an area where Mexico has lagged behind when compared with Brazil and Chile. “Private investment is one of the most important sources of permanent growth,” he says, as it can bring about more technology, improved infrastructure, and production processes.