Can we eliminate Mexico’s informal economy? Should we?

4/28/2016 El Daily Post

peso by Guanatos GwynIt’s hard to imagine a Mexico without an informal sector. But maybe that’s because we haven’t had a chance to even consider such a thing in living memory. There are sound economic reasons for wanting to bring Mexico’s vast “gray economy” into line. Doing it, however, is another story.

The official goal, at all levels of government in Mexico, is to eliminate the informal economy.It’s a goal not just because of the lost tax revenue that off-the-books employment and unregistered businesses cost the public treasury. Nor is it just because informal vendors are a nuisance.

It’s because the immense size of the Mexican informal sector is a drag on economic growth.

he numbers tell the story.

As of the end of 2015, Mexicans who work in the informal sector make up more than half the labor force.

In other words, 53.4 percent of Mexicans who earn money do it without paying taxes or even being registered with the tax service (SAT) of the Finance Secretariat. They are not enrolled in the Social Security System. They are not officially employed or registered as a business.

Read more…


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