Informal Economy Reaches Historic High: INEGI

In 2023, the informal economy's share of Mexico's GDP rose to 24.8%, up from 24.4% in 2022, as reported by INEGI’s Informal Economy Measurement (MEI). This represents the highest recorded share since 2003, when data collection began, accounting for 23.1%.

INEGI categorizes informality into two main groups: the Informal Sector (SI), which consists of micro-businesses lacking the necessary legal registrations to operate, and Other Forms of Informality (OMI), which includes paid domestic workers, legal businesses that lack proper labor protections, and income from workers in agriculture.

Of the 24.8% of GDP attributed to informality, 13.8% is derived from the SI, while 11.0% comes from OMI. According to INEGI, the total GDP grew by 3.3% in 2023 compared to 2022, with the formal economy expanding by 3.7% and the informal economy growing by 1.9%.

By sector, retail trade's contribution to the informal economy increased slightly, rising from 28.6% to 28.8% in 2023. The construction sector also saw growth, rising from 14.6% to 14.7%, while the agricultural sector grew from 11.4% to 11.6%. Other services, excluding government activities, increased from 5.8% to 6.1%. Manufacturing industries saw a decline, from 13.8% to 13.6%, while wholesale trade decreased from 7.3% to 7.1%. Together, retail trade and construction accounted for 68.3% of the informal sector in 2022 and 68.4% in 2023, reported INEGI.

Luis Miguel González, Independent Economist and Journalist, stated that the increase in the informal economy calls for in-depth, multidisciplinary analysis. "Over the past 21 years, the informal sector has outpaced the growth of the formal economy. The number of people employed in the informal economy has nearly tripled, rising from 11.2 million in 2003 to over 32 million today."

He emphasized the importance of examining factors such as region, gender, and age. For instance, in Oaxaca, informality reaches 81%, while in Coahuila, the rate stands at 34%. Among the employed population over 65 years of age, the informality rate is 83%. "Informal workers remind us that in Mexico, the playing field is not level. They are the group that does not pay taxes, but also those who lack benefits and do not generate the rights they should."