STPS Rules Out Fiscal Incentives as Mexico Shortens Workweek

Mexico’s Ministry of Labor and Social Welfare (STPS) will not offer fiscal incentives for the gradual reduction of the workweek to 40 hours by 2030. The reform affects over 13 million workers, maintains wages, caps overtime, and requires SMEs and labor-intensive sectors to improve productivity and operational efficiency.

The Ministry of Labor and Social Welfare (STPS) will not provide fiscal support for the upcoming reduction of the workweek from 48 to 40 hours, citing a gradual implementation plan as sufficient for businesses to adapt. The reform affects over 13 million workers and will be phased in through 2030.

Marath Bolaños, Minister of Labor , emphasizes that the constitutional reform’s gradual rollout will allow companies to adjust without requiring financial stimuli, reports Reforma. Under the plan, weekly hours will decline by two hours each year from 2027, reaching 40 hours in 2030. Wages and benefits will remain unchanged, overtime will be capped, and minors will be prohibited from performing extra work.

“The gradual transition is designed to let companies assimilate the reduction successfully and without major costs,” Bolaños says. “With this approach, fiscal incentives are not necessary.”

Gradual Implementation Instead of Subsidies

The STPS position contrasts with requests from private-sector groups and opposition lawmakers for fiscal support, particularly for SMEs concerned about increased labor costs. While PRI, PAN, and Movimiento Ciudadano have called for tax incentives to mitigate the financial impact, Bolaños and the ministry argue that a multi-year, stepwise reduction provides adequate time for operational adjustments.

Quia Chávez, Deputy Minister of Employment, notes: “Long working hours negatively impact health, family life, and education. Gradual reductions help balance worker well-being with business capacity.”

The reform sets a staged schedule: 46 hours in 2027, 44 in 2028, 42 in 2029, and 40 in 2030. During 2026, authorities and companies will finalize secondary regulations and conduct public consultations to prepare for compliance.

Operational and Productivity Considerations

According to IPADE Business School, reducing weekly hours without productivity adjustments could increase labor costs between 10% and 25%. Companies may need to hire additional staff to maintain operations or reorganize workflows to prevent work intensification. “The main challenge is not the number of hours, but productivity per hour. Mexico works long hours but with relatively low output,” says Antonio Sancho, Professor, IPADE.

IPADE recommends firms shift from time-based management to results-oriented models, invest in automation and process optimization, simulate 40-hour scenarios, and run pilot programs to identify operational gaps. SMEs face particular pressure, as narrower financial margins can make compliance costs — such as electronic time tracking and potential new hires — more significant.

The reform maintains the standard eight-hour day and sets clear limits on overtime: up to 12 double-paid hours and four triple-paid hours per week, totaling a maximum of 56 hours. Overtime will be calculated from the 41st hour, and minors are barred from working extra hours. Wages, benefits, and premiums remain intact, ensuring income protection even as weekly hours decline.

Bolaños highlights that the constitutional language preserves flexibility for sectors with variable production cycles, including manufacturing, logistics, agriculture, and services, while electronic monitoring will enforce compliance.

Political and Market Debate

Despite broad legislative backing, opposition voices and labor groups continue to debate details such as mandatory rest days and the impact on SMEs. Lawmakers have emphasized the need for continued dialogue and gradual adoption, while business groups affiliated with the Business Coordinating Council (CCE) expressed conditional support, noting that a phased approach reduces abrupt financial pressures. However, SMEs warn that without parallel productivity strategies, costs could rise, especially in labor-intensive industries.

Mexico’s workforce averages more than 2,100 hours per year — among the highest in the OECD — while countries like France, Denmark, and Germany maintain standard weeks at or below 36 hours. Officials argue that gradual hour reductions, capped overtime, and monitoring will improve rest, reduce fatigue, and potentially enhance productivity per hour worked.

By rejecting fiscal incentives, STPS positions gradual implementation as the central mechanism to enable companies to adjust to a shorter workweek. The reform provides legal certainty, wage protection, and defined limits on overtime, while companies must invest in productivity and operational efficiency. Its success will hinge on the ability of businesses, particularly SMEs, to adapt, and on effective enforcement of compliance measures.

Mexico now sets a constitutional path toward a 40-hour workweek by 2030, establishing a multi-year transition that balances worker well-being with business adaptability, without direct financial subsidies from the government.