Mexico Prepares for Broad Labor Shifts in 2026

Mexico enters 2026 facing a series of labor changes that will affect workforce costs, compliance requirements, and operational planning, as wage policy adjustments, expanded social security coverage, and structural reforms converge amid a cautious employment outlook.

Business decisions are expected to remain conservative as companies navigate uncertainty around investment, trade conditions, and rising labor costs. Alberto Alesi, General Director for Mexico, the Caribbean and Central America, Manpower Group said the employment environment points to a “notably more conservative” year if trends observed in 2025 continue, reports El Economista. He says that employers are closely monitoring productivity and macroeconomic factors following a period marked by weaker private investment and job losses during the summer months of last year.

A key change for 2026 is the increase in the minimum wage approved by the National Minimum Wage Commission.  The general daily minimum wage rose 13% to MX$315.04 (US$17.54) starting Jan. 1, while the Northern Border Free Zone rate increased 5% to MX$440.87 (US$24.55). According to the Ministry of Labor, the adjustment will benefit about 8.5 million workers and supports the administration’s goal of enabling minimum-wage earners to cover at least two basic consumption baskets.

Marath Bolaños, Minister of Labor, says the government’s wage policy has increased the purchasing power of the minimum wage by 154% between 2018 and 2025 through consensus-driven decisions. The final increase followed negotiations in which unions had sought an adjustment of more than 30%, citing the need to restore historical purchasing power.

For employers, the wage increase extends beyond direct payroll effects. According to Bloomberg, KPMG Mexico warns that higher minimum wages can raise the base salary used for calculating social security contributions to the Mexican Social Security Institute (IMSS), with knock-on effects for benefits such as bonuses, vacation premiums, and year-end payments.

Digital Platform Workers Enter the Formal System

Another major shift involves digital platform workers. As of Jan. 1, 2026, the pilot program to register delivery drivers and ride-hailing workers with social security concluded, making enrollment mandatory. Updated rules published in late December revised how net income is calculated after authorities analyzed data from the trial period.

Under the updated methodology, exclusion factors applied to gross income vary depending on the mode of transport used, reflecting operating costs. The maximum exclusion is 48% for workers using cars, followed by 32% for motorcycles and 3% for non-motorized transport. Gross income now includes payments for tasks, incentives, and bonuses, while tips are excluded.

The Ministry of Labor says the reform has expanded coverage for occupational risk insurance to about 1 million platform workers per month during the pilot. Around 900,000 workers reached a condition of legal subordination that grants access to social security benefits. Data from the social security institute shows formal employment reached a historic high of 23.59 million registered jobs in July 2025, with strong growth in transport and communications linked in part to the inclusion of platform workers.

Ley Silla Compliance Becomes Fully Enforceable

Companies also face full enforcement of the Ley Silla, a reform to the Federal Labor Law that guarantees rest periods with seating for workers who perform standing tasks. After a 180-day transition period that ended in December, labor authorities can now require documentary evidence that internal workplace regulations include provisions on rest breaks and seating.

The law applies across all sectors and company sizes. Inspectors may assess fines per affected worker for noncompliance, ranging from MX$28,285 (US$1,575) to MX$282,850 (US$15,754). While the reform reframes seating as a preventive occupational health measure, business groups have raised concerns about the absence of standardized criteria for rest duration and frequency, prompting proposals in Congress to clarify implementation parameters.

Path Toward a 40-Hour Workweek

Looking ahead, employers are also preparing for the reduction of the standard workweek from 48 to 40 hours. The Ministry of Labor has submitted a constitutional reform to Congress proposing a gradual reduction beginning in 2027, with 2026 designated as an adaptation year. The plan would reduce the workweek by two hours per year until reaching 40 hours in 2030, without reducing wages.

The proposal would require mandatory electronic recording of working hours, strengthening oversight of overtime and compliance. Officials argue that international evidence supports phased reductions as a way to reduce fatigue and workplace accidents while supporting productivity. Business associations have expressed conditional support, highlighting the need for gradual implementation, particularly for small and medium-sized enterprises.

Additional Regulatory Changes for 2026

Other changes scheduled for 2026 include an update to the employment subsidy, increasing the monthly amount from MX$475 (US$26.46) to MX$536.21 (US$29.87), and stricter validation of digital payroll tax receipts. The tax authority will reinforce checks on payroll data to reduce errors and improve information quality.

Taken together, the reforms signal a continued shift toward formalization, expanded worker protections, and closer oversight. For companies, 2026 is shaping up as a year focused on compliance and adjustment rather than expansion, as employers balance higher labor costs, new reporting obligations and operational changes in an environment of moderate growth and cautious investment.