Mexico Achieves 44.6% Formal Employment but Job Growth Slows

Mexico ended 2025 with 44.6% of its employed population holding a formal job, equivalent to 26.5 million workers, according to the Labor and Social Welfare Ministry (STPS), even as hiring slowed sharply and formal job creation remained far below the level required to meet the country’s labor demand.

The Ministry of Labor says the figure, based on data from the National Occupation and Employment Survey (ENOE), reflects what it described as a statistically appropriate measurement of labor formality and provides a clearer picture of employment conditions, at a time when analysts point to a sustained deceleration in the formal labor market. Officials say the data shows that formal employment in Mexico extends beyond registrations with the Mexican Social Security Institute (IMSS), including workers affiliated with other public systems such as the Institute for Social Security and Services for State Workers (ISSSTE).

“Formal employment should be measured over the employed population, not the total population,” says the ministry in a statement, arguing that broader comparisons distort labor indicators by including children, pensioners, and others who do not legally participate in the labor market. The clarification comes amid ongoing public debate over employment performance, informality, and the pace of job creation.

While labor authorities emphasize progress in social protection coverage, employment data from IMSS and independent analysts point to a year marked by cautious hiring and weak net job creation. IMSS reports that 278,697 formal jobs were added nationwide in 2025, a figure slightly higher than in 2024 but well below Mexico’s historical range and far short of the estimated 1 million to 1.2 million jobs required annually to absorb new labor market entrants.

The annual growth rate of registered employment stood at 1.3%, one of the lowest observed in recent years. The figure confirms a second consecutive year of deceleration and signals a labor market that is stabilizing at a lower level of dynamism following post-pandemic recovery, comments Expansión. 

Alberto Alesi, General Director, ManpowerGroup for Mexico, the Caribbean, and Central America, says companies maintained a cautious stance throughout 2025 as they evaluated productivity trends, regulatory changes, and external risks. “Employers monitored macroeconomic conditions closely and adjusted hiring decisions accordingly,” he says, adding that uncertainty around trade relations, labor reforms, and rising labor costs contributed to delays and pauses in recruitment.

The slowdown occurred despite sustained wage growth. IMSS data shows that the average daily base salary for registered workers reached MX$627.9 (US$35.20) in December, the highest level recorded for that month. Salaries rose 6.9% in nominal terms over the year, reflecting accumulated wage adjustments, minimum wage increases, and easing inflation. Nearly 87% of registered positions were permanent, also a record for December, indicating that employers prioritized retaining existing workers and adjusting compensation rather than expanding payrolls.

This combination of higher wages and slower hiring has shaped labor market dynamics. Companies appear to be strengthening job stability for current employees while limiting new additions, reports Expansión. This strategy supports income growth but constrains overall employment expansion.

Seasonal factors further affected year-end figures. In December alone, IMSS reported a net loss of 320,692 jobs, consistent with typical year-end adjustments tied to plant closures, the completion of temporary projects, and reduced activity in sectors such as manufacturing, construction, commerce, and services. Although the decline was smaller than in several previous Decembers, and the most moderate in relative terms in more than a decade outside the pandemic period, it erased much of the net employment gain recorded earlier in the year.

Sectoral data underscores the uneven nature of employment trends. Transportation and communications recorded the highest annual growth rate in registered jobs, supported in part by changes linked to digital platform work. Commerce and electricity also posted gains, while manufacturing and construction registered annual declines. The weakness in investment-related sectors reinforces concerns about the underlying strength of job creation.

A key factor shaping the 2025 employment figures was the federal government’s pilot program to incorporate digital platform workers into the social security system. The six-month program, implemented following labor reforms enacted in late 2024, required delivery and ride-hailing platforms to register workers who exceeded a defined income threshold with IMSS.

According to IMSS, 206,521 platform workers were registered as formal jobs under the pilot, accounting for a substantial share of the year’s net job creation. In total, 1.27 million platform workers benefited from the reform through varying levels of coverage. Those who surpassed the income threshold gained access to the full range of social security benefits, including health care, occupational risk coverage, disability and life insurance, retirement savings, and childcare services. Workers who did not meet the threshold received occupational risk insurance covering accidents and work-related illnesses.

Gabriela Siller, Director of Economic Analysis, Banco Base, says that if platform-related registrations are excluded, formal job creation in 2025 would have been closer to 72,000 positions. She notes that such a result would represent the weakest employment performance since 2020, when job creation collapsed during the pandemic. “The apparent improvement in employment figures is largely explained by the platform pilot,” she says, adding that underlying trends in permanent employment have remained below their long-term trajectory for several months.

Data from the National Institute of Statistics and Geography (INEGI) shows that the number of permanent IMSS-insured workers has stayed below trend for nine consecutive months, marking the largest negative gap since the pandemic period. Analysts cited above say this pattern suggests structural headwinds rather than short-term volatility.

Despite weak job creation, labor authorities highlight broader measures of social protection. The Ministry of Labor says Mexico’s social security coverage reached 80.8% when all public schemes are considered, a level it said compares favorably with international benchmarks. Officials caution, however, against direct comparisons with countries such as the United States, arguing that differences in social security systems and labor definitions make such comparisons methodologically invalid.

Using the employed population as a base, the informal employment rate stood at 55.4% in the third quarter of 2025. While the figure remains a structural challenge, it is below the historical peak of 59.8% recorded during the global financial crisis in 2009. Authorities say reducing informality remains a central policy objective, particularly given its implications for productivity, tax revenues, and worker protection.

The platform worker pilot has become a focal point in that effort. IMSS and the Ministry of Labor are reviewing the program’s operational and financial outcomes to define a permanent framework for integrating platform workers into the mandatory social security system. Authorities say the results will inform a proposed reform to the Social Security Law expected to be submitted to Congress later in 2026.

The review comes as policymakers weigh unresolved questions, including how to allocate contribution responsibilities between platforms and workers, how to calculate contributions when income fluctuates, and how to preserve flexibility without undermining access to benefits. Officials say the pilot’s rules will remain in place until a final legal structure is approved to avoid regulatory gaps.

Beyond platform work, IMSS has expanded coverage through alternative schemes, including voluntary insurance for independent workers, domestic worker registration, and family health plans. At the end of 2025, more than 8.8 million people were covered through nontraditional modalities, providing additional reference points for policy design.

Looking ahead, analysts expect hiring to remain contained in 2026. ManpowerGroup estimates that formal job creation could range between 150,000 and 300,000 positions, reflecting continued caution among employers. Business groups point to moderate economic growth forecasts from institutions such as the International Monetary Fund (IMF), the OECD, and the Bank of Mexico, generally clustered around 1.2% to 1.5%.

Employers also face upcoming regulatory changes that may affect labor costs and planning. These include higher minimum wages, rising social security contributions, the implementation of the Ley Silla mandating rest periods for standing workers, and preparations for a gradual reduction of the standard workweek from 48 to 40 hours starting in 2027, with 2026 designated as a transition year.

As Mexico enters 2026, the labor market reflects a complex balance. Formal employment and social security coverage have expanded in structural terms, supported by policy changes and wage growth. At the same time, weak net job creation, persistent informality, and sectoral disparities continue to constrain labor market performanc