Low Unemployment Masks Mexico’s Informality, Gender Gaps

In April 2025, Mexico’s labor market maintained a low unemployment rate of 2.59%, marking a notable 30-month streak below the 3% threshold commonly linked to full employment, based on data from INEGI. However, the country still faces challenges, including widespread informality, underemployment, and significant gender disparities that continue to impact job quality and workforce participation.

During the month, the economically active population (EAP) reached 61.5 million individuals aged 15 and older, a slight increase from the previous year. The labor force participation rate also declined from 60.5% to 59.4%, with men participating at 75.2% and women at just 45.4%. Both genders experienced participation declines, underscoring ongoing barriers, especially for women entering the workforce.

Out of the total EAP, 59.9 million individuals were employed — an increase of 88,000 compared to the previous year. Most workers (69.5%) were salaried employees, growing by 424,000. Self-employed workers without employees totaled 12.7 million (21.3%), down by 481,000, while the number of employers rose by 401,000 to 3.6 million. Additionally, 2 million people contributed unpaid labor in family businesses, a decrease from last year.

Services was the largest employment sector, with 26.3 million workers (44%), followed by commerce (20%), manufacturing (16.5%), agriculture (10.4%), and construction (7.8%). Job growth was strongest in commerce, manufacturing, and professional/financial services.

However, the North American Trade Integration and Risk: Sectoral Labor Force Exposure in Mexico to US Tariffs study, reveals that a looming trade conflict with the United States could jeopardize over 4.1 million jobs in Mexico, primarily in manufacturing, agriculture, and mining, reports MBN.

Unemployment, Underemployment, and Informality Trends

According to the ENOE, the number of unemployed individuals declined by 43,000 to 1.6 million, representing 2.5% of the labor force. While male unemployment decreased, female unemployment rose slightly. Most unemployed persons were aged 25 to 44 (46.5%), followed by youth aged 15 to 24 (31.7%). 

Although youth unemployment has reached a historic low of 13% globally, ILO highlights a concerning paradox: mental health challenges and declining well-being among young workers are increasing. To address this, the ILO recommends stronger school-to-work transition programs, expanded mental health support, and initiatives to improve digital well-being.

Over 70% of the unemployed had been without work for three months or less, highlights the report. Educational attainment among this group was relatively high, with 87.9% having completed secondary education or higher.

In response to economic barriers to education, the federal government announced a bimonthly investment exceeding MX$23.9 billion (US$1.45 billion) to support more than 13 million students at all levels through scholarship programs. In 2025, total funding for scholarships and educational infrastructure will exceed MX$144.8 billion (US$8.7 billion).

Informal employment remains a major challenge, with 54.7% of workers (32.7 million people) engaged in informal labor — working without formal contracts or social security. Informality rates are slightly higher among women (54.9%) than men (53.9%). States like Guerrero and Chiapas have informality rates above 76%, whereas Nuevo Leon and Chihuahua report rates near 30%, though gender disparities persist nationwide.

Underemployment — working fewer hours than desired — improved slightly to 6.9%. Nearly half of the underemployed are salaried workers, with self-employed workers accounting for about 41%, down from the previous year. This indicates many workers still struggle to secure sufficient income and stable hours.

Labor poverty, defined as earning too little to cover basic food needs, affected 35.1% of Mexicans in early 2025, showing modest improvement due to rising real wages, writes MBN. However, 64.3% still cannot cover both food and non-food basic needs from labor income alone. Women face greater hardship, with 35.9% in labor poverty compared to 31.7% of men. The states with the highest female labor poverty also have the highest informality rates, highlighting the close link between precarious work and poverty.

Trade remains a critical factor for Mexico’s labor market. The ILO reports that 17.1% of the workforce in Mexico and Canada is directly or indirectly linked to US consumer demand. Heightened US trade restrictions could disrupt an estimated 84 million jobs across 71 countries, with North America facing significant exposure.