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It looks as if Mexico has an unemployment problem.

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Mexico to lose up to 300,000 jobs, minister says
Mon Feb 16, 2009 11:32am GMT By Estelle Shirbon

PARIS, Feb 16 (Reuters) - Mexico risks losing up to 300,000 jobs because of the economic crisis despite a government infrastructure spending programme that can employ some 750,000 people, Economy Minister Gerardo Ruiz Mateos said on Monday.

Mexico's economy is expected to shrink around 1 percent this year because of a slump in U.S. demand for manufactured exports from cars to refrigerators, while tourism and remittances from Mexicans living abroad are also being squeezed.

"The estimation we have is between 250,000 and 300,000 people," Ruiz Mateos told reporters during a visit to Paris, in answer to a question on how many Mexicans were expected to lose their jobs during the global economic slump.

Ruiz Mateos said the government was responding in two ways, with an infrastructure spending programme and with measures to support companies to dissuade them from laying off workers.

"We will do things that the government hadn't been able to do in recent years like cleaning roads, building secondary roads, renovating rural schools, and this could provide employment, more or less, for some 750,000 people," he said.

"In parallel, we have a jobs protection programme targeted at companies that will suffer a drop in demand for their exports and we think that with that programme we will save about half a million jobs that were going to be cut."

Mexican auto production and exports nosedived by more than 50 percent year-on-year in January, the latest sign of how the country is being hit by recession in its key trading partner, the United States.

Asked about this, Ruiz Mateos said that one positive sign was that none of the auto companies that had formally announced investment programmes in Mexico had dropped those plans.



AUTOS

"Ford (F.N) had announced a $3.5 billion investment programme last year and that is going ahead. General Motors (GM.N) announced investment of $600 million in a transmission plant and that is going ahead," he said.

It is unclear how long such plans will hold up, however, given the deep crisis ripping through the U.S. auto industry. General Motors is struggling to make deals with workers to cut costs, failing which it could be forced to consider bankruptcy.

Turning to trade matters, Ruiz Mateos said some Mexican steel producers had expressed concerns about the Buy American provision in Washington's stimulus package.

The provision requires that any public building or public works project funded by the package use only iron, steel and other manufactured goods produced in the United States.

But Ruiz Mateos said Mexico had been reassured by changes to the Buy American provision made by Congress, which stipulate that it "be applied in a manner consistent with U.S. obligations under international agreements."

Mexico and the United States are members of the North American Free Trade Agreement (NAFTA), and Ruiz Mateos said that commitment by Washington ensured Mexican rights under NAFTA would be respected.

"We are satisfied with that. I think it will be a programme that will incentivise and lift the U.S. economy and that will be a great help to overcome the global crisis," he said.

Ruiz Mateos also said Mexico and the United States would soon resolve their dispute over new U.S. meat labelling rules, which he called "a minor problem". The rules, which are due to take effect on March 16, require that meat packages in U.S. supermarket carry country-of-origin labels.

Canadian and Mexican officials have argued the rules would lead U.S. meat plants and consumers to discriminate against their animals, though Canada has already dropped its complaints. (Reporting by Estelle Shirbon; Editing by Toby Chopra)