Formal Employment in Mexico Faces Slow Recovery

Mexico closed 2025 with limited growth in formal employment, according to a report published Jan. 9 by the think tank México, ¿cómo vamos? (MCV). Only 278,697 new formal jobs were added throughout the year, far below the MCV target of 1.2 million, placing the national Semáforo Económico (Economic Traffic Light) for job creation in red. The report highlights persistent stagnation across industries, regional disparities, and the ongoing gap between male and female workforce participation.

“Employers are closely monitoring productivity and macroeconomic factors after a period marked by weaker private investment and job losses,” says Alberto Alesi, General Director for Mexico, the Caribbean, and Central America, Manpower Group. He describes 2026 as likely to be “notably more conservative” if trends from 2025 continue, reflecting caution among businesses navigating structural reforms, wage increases, and rising labor costs.

The MCV report identifies the manufacturing sector — referred to as “industries of the transformation” — as particularly affected, with 127,200 jobs lost in 2025. This represents the second-largest decline in 20 years, exceeded only by the 2008–2009 financial crisis. Employer registrations with the Mexican Social Security Institute (IMSS) fell 2.4% in December, indicating a shrinking base for future growth. Regionally, Mexico City, Tlaxcala, and the State of Mexico showed modest gains, while 18 states, including Campeche, which contracted 8.3%, recorded net job losses. Gender disparities persist, with only 68 women registered for every 100 men nationwide.

Economic forecasts for 2026 suggest that these challenges may continue. COPARMEX notes that GDP growth is expected to remain moderate, with estimates from the IMF and OECD between 1.2% and 1.5%, while Banxico anticipates 1.3%. Persistent informality, demographic trends, and regional insecurity further complicate efforts to expand formal employment. More than 55% of workers remain in informal jobs, limiting access to social security and constraining productivity, COPARMEX warns.

Public policy is positioned as a central lever for addressing these gaps. The government raised the general minimum wage by 13% to MX$315.04 (US$17.59)  per day and the Northern Border Free Zone rate by 5% to MX$440.87 (US$24.61) , affecting about 8.5 million workers. Marath Bolaños, Minister of Labor, highlights that wage policy increased purchasing power by 154% from 2018 to 2025. However, higher wages also affect employer contributions to IMSS and influence benefits such as bonuses and vacation pay.

In addition to wage adjustments, labor authorities have moved to expand social security coverage to workers in the digital platform economy. Following a six-month pilot program, authorities are evaluating mechanisms to integrate app-based workers for companies such as Uber, DiDi, and Rappi into the mandatory social security system. During the pilot, 1.27 million platform workers benefited from reforms, with over 200,000 registered as formal jobs under IMSS, granting access to health care, retirement, and occupational risk coverage. The outcome will inform a proposed Social Security Law reform expected to be sent to Congress later in 2026.

Other regulatory changes that will shape the labor landscape include the Ley Silla reform, which mandates seating and rest periods for workers performing standing tasks. The Ministry of Labor is also preparing for a gradual reduction of the standard workweek from 48 to 40 hours beginning in 2027, with 2026 serving as an adaptation year. Additional updates to employment subsidies and stricter payroll compliance checks are scheduled for 2026, signaling a continued focus on formalization and oversight.

Sector data shows areas of relative strength. Transportation and communications, influenced in part by the inclusion of platform workers, recorded the highest growth in registered jobs at 13.7%, while commerce and electricity also posted gains. IMSS reported 23.9 million affiliations linked to an employer by the end of 2025, the highest December level on record, with permanent positions accounting for nearly 87% of jobs. Despite these gains, December saw a net decline of 320,692 positions, erasing much of the year’s progress.

Experts say translating Mexico’s economic stability into sustainable job creation will depend on coherent public policy, investment in SMEs, strengthened human capital, and security improvements. COPARMEX emphasizes that regional integration and nearshoring could provide opportunities, but structural and institutional challenges must be addressed to avoid prolonged labor stagnation.

Mexico’s labor market enters 2026 at a crossroads: new protections and formalization efforts are underway, but the nation faces the dual pressures of moderating growth and the need to expand quality formal employment. The coming months will test whether reforms and policy adjustments can convert economic stability into meaningful gains for workers and businesses alike.