Mexico Ended 2025 With Second-Weakest Job Creation in a Decade

Mexico closed 2025 with one of its weakest years for formal job creation in the past decade, as official data showed limited hiring and analysts cautioned that headline employment figures obscure deeper structural pressures in the labor market.

“The apparent expansion of formal employment does not reflect the underlying strength of job creation,” reported BBVA Research in a January analysis, noting that much of the reported growth was driven by statistical formalization rather than new economic activity.

According to the Mexican Social Security Institute (IMSS), the country generated 278,697 formal jobs in 2025, including permanent and temporary positions. Excluding 2020, when the COVID-19 pandemic disrupted labor markets, this was the second-lowest annual figure in the past 10 years. Of those jobs, 208,691 were permanent, marking the lowest annual creation of permanent positions in a decade, while 70,006 were temporary, cites Animal Político. 

BBVA Research estimates that even this modest figure overstates labor market momentum. While IMSS data show formal employment growing at an annual rate of about 1.3%, equivalent to roughly 213,000 net additions, a significant share reflects the registration of digital platform workers into the social security system. These workers were already economically active but had operated outside formal coverage. When the platform effect is excluded, BBVA estimates net job creation falls to about 72,000 positions, or 0.3% growth, the weakest performance since 2010 outside the pandemic year.

The gap between reported and adjusted figures underscores a labor market constrained by low investment, weak productivity growth and persistent informality, according to analysts. México, ¿cómo vamos? (MCV), a labor market think tank, noted that job creation in 2025 fell far short of its benchmark of 1.2 million new formal jobs per year, placing its Economic Traffic Light indicator for employment firmly in red.

IMSS reported that total affiliated employment reached 22.5 million workers by the end of 2025, a figure highlighted by federal authorities. Analysts cautioned, however, that the headline number reflects the total stock of registered workers rather than the pace of new hiring. Over the past two years, annual job creation has remained only slightly above 200,000, well below historical norms and the level required to absorb new labor market entrants.

Employment conditions weakened toward the end of the year. In December alone, IMSS reported a net loss of 320,692 formal jobs, including 234,705 permanent positions. While December losses are common due to seasonal contract adjustments, the scale of the decline reflected broader fragility. The largest monthly contractions were recorded in extractive industries, agriculture and construction.

Sector data for the year showed uneven performance. Agriculture contracted 3.9% in 2025, extending more than two years of negative growth. Manufacturing, the country’s main employment engine, lost about 127,200 jobs, one of its steepest annual declines outside major crises. Construction employment fell 2.3%, reflecting weak investment and delayed projects. Gains were concentrated in transport and communications, commerce and electricity, although analysts said growth in transport was inflated by the inclusion of platform workers.

Regional disparities were also pronounced. States such as Campeche, Tabasco and Coahuila posted the largest annual declines in formal employment, while Mexico City, the State of Mexico and Tlaxcala recorded modest gains. Analysts noted that growth in metropolitan areas was closely tied to platform worker registrations rather than the broad-based expansion of traditional payrolls.

Despite weak hiring, wages continued to rise. IMSS data show the average real salary for registered workers increased about 3.1% in 2025, while the real wage bill grew 4.4%. BBVA Research said that once platform worker effects are excluded, wage bill growth slows to about 3.4%, which could limit household consumption in 2026, particularly among informal workers who lack stable income growth.

Public policy played a central role in shaping labor outcomes. In January 2026, the federal government implemented a 13% increase in the general minimum wage and raised the rate in the Northern Border Free Zone by 5%. Labor authorities also advanced preparations for a gradual reduction of the standard workweek from 48 to 40 hours starting in 2027, with 2026 designated as a transition year.

Another major shift was the expansion of social security coverage to digital platform workers. Following a six-month pilot program, about 206,000 platform workers were registered with IMSS as formal jobs in 2025, while more than 1.2 million received some level of coverage. Labor officials say the initiative reduced informality in registration, although economists cautioned that formalization alone does not translate into higher productivity or new job creation.

The Labor and Social Welfare Ministry reported that 44.6% of Mexico’s employed population held a formal job by the end of 2025, equivalent to about 26.5 million workers, based on household survey data. Officials argued that broader measures of formality, including workers covered by other public systems, provide a more complete picture of labor conditions. Independent analysts, however, emphasized that more than half of Mexico’s workforce remains informal, limiting productivity, tax collection and access to training.

Business confidence indicators point to continued caution. Gross fixed investment declined in real terms during late 2025, and employer sentiment surveys remained below neutral levels. Alberto Alesi, General Director for Mexico, the Caribbean and Central America,  ManpowerGroup, said companies remained focused on controlling costs and monitoring regulatory changes. He described 2026 as likely to be “more conservative” in hiring if current conditions persist.

Sources: MCV, IMSS, INEGI 

Economists expect formal job creation to remain contained, with forecasts ranging between 150,000 and 300,000 new positions in 2026. With GDP growth projections clustered around 1.2% to 1.5%, analysts say a sustained recovery in employment will depend on higher productive investment, stronger business confidence and policies that translate formalization efforts into durable gains in job quality and productivity.