Withdrawals from Mexican pension funds soar amid weak labor market

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FILE PHOTO: A bricklayer waits for work outside the Metropolitan Cathedral at Zocalo Square in Mexico City, Mexico November 9, 2017. REUTERS/Henry Romero

July 16, 2020

MEXICO CITY (Reuters) – Withdrawals from Mexican pension funds resulting from unemployment soared in June to a record high, according to official data, as the country’s labor market continues to suffer.

Withdrawals during the month totaled 1.86 billion pesos ($83 million), more than twice the 921 million pesos withdrawn in June 2019, according to figures released Wednesday by pensions regulator Consar.

During the first half of this year, withdrawals of funds by Mexicans who lost their jobs totaled 8.57 billion pesos, also a record for the six-month period.

The Mexican economy is reeling from the COVID-19 pandemic and lockdown measures intended to curb its spread, which paralyzed much of the economy over the past few months.

Mexico’s social security institute IMSS reported over the weekend that more than 83,000 formal jobs disappeared in June, down from the nearly 345,000 lost in May.

Since March, the pandemic is blamed for the loss of over a million formal jobs.

President Andres Manuel Lopez Obrador has said that in July Mexico will stop losing jobs. Still, analysts anticipate that the economy will contract sharply this year.

Pension funds in Mexico, also known as afores, managed savings of some 4.3 trillion pesos at the end of June, according to Consar data.

(Reporting by Noe Torres; Editing by David Alire Garcia and Mark Potter)

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