Formal Job Creation Falls 67% Amid December Layoffs

Mexico's job market experienced a severe downturn in December 2024, with 405,259 jobs lost. This decline marks a 67% fall in formal job creation, largely due to seasonal layoffs and slowdowns in sectors like construction, agriculture, and manufacturing. Experts warn that the country’s economy could face ongoing challenges as 2025 approaches. 

In December, IMSS reported the loss of 256,998 permanent jobs, which accounted for 63.4% of total job cancellations. Temporary positions also saw a decline, with 148,261 jobs eliminated. Employers often use December layoffs to rehire workers in January, a strategy aimed at reducing employment costs, as reported by MBN. While this practice helps businesses, it leaves workers vulnerable, as it can disrupt their rights and social security benefits, creating uncertainty for job seekers during the holiday season.

This decline resulted in a 67% drop in net formal job creation for 2024, with only 213,993 jobs added throughout the year. This was the worst start to a six-year term for the Mexican government since 2003, a year that saw just 25,280 net hires, reports El Economista. Labor informality also reached its highest level in 2024, highlighting the growing challenges in formal employment.

Job losses were particularly noticeable in the construction, agriculture, and manufacturing sectors, with construction seeing a 6.3% decline. This was largely attributed to the slowdown in public infrastructure projects, such as the Mayan Train.

Industry experts, including Gabriela Siller, warn that the sharp decline in job creation could signal the onset of an economic recession in the country. However, Alberto Alesi, Director General for Mexico, the Caribbean, and Central America, ManpowerGroup, noted that many of the job losses in December were cyclical, related to the closure of production plants and the end of temporary projects. He expects some of these lost positions to be rehired in 1Q25.

This first quarter is expected to see the creation of up to 300,000 formal job opportunities. According to the ManpowerGroup Mexico Employment Outlook Survey, 48% of companies plan to expand their workforce in the coming months. However, despite the potential for recovery, the number of employers registered with IMSS declined by 1.7% in 2024, signaling ongoing concerns in the labor market, writes El Economista.