The Year in Talent: Labor Reforms Reshape the Future

With a new administration in place, Mexico is embarking on sweeping labor reforms that could redefine the country's workforce dynamics. From raising the minimum wage to debating shorter workweeks and extending benefits to app-based workers, these measures signal a pivotal moment in labor policy. The changes are poised to reshape economic structures and employment practices, marking a turning point for the talent industry in the year ahead.

President Claudia Sheinbaum identified raising the minimum wage as a cornerstone of her labor reforms, with the goal of enabling it to cover the cost of 2.5 basic food baskets compared to the current 1.6 baskets, according to MBN. The basic food basket—a benchmark for essential nutritional needs—serves as a measure to determine whether wages adequately support workers’ living standards. 

Only a few months following the start of Sheinbaum’s administration, the National Commission on Minimum Wages (CONASAMI) approved a 12% increase in the general minimum wage, raising it from MX$248.93 to MX$278.80 per day, effective Jan. January 1, 2025.  This increase aims to enhance workers’ purchasing power and reduce economic inequality while addressing systemic disparities. President Sheinbaum emphasized that the planned wage increase would significantly outpace inflation, which is projected to reach 3.5% by December 2025. Senator Oscar Canton reinforced the broader impact of this reform, asserting that the reform seeks to envision a future where the minimum wage no longer consigns workers to poverty.

This increase also extends to professional minimum wages, benefiting 61 specific professions and trades, as reported by MBN. Among these, journalists and photojournalists in daily print media will see the highest professional minimum wage, set at MX$624.30 per day or MX$18,978.72 per month. Currently, the average journalist in Mexico earns MX$9,042 per month while working 41.5 hours a week, according to the Ministry of Economy. Professional minimum wages aim to shield workers in industries prone to wage stagnation, ensuring fairer compensation for their specialized skills.

While these measures are ambitious, they come with complexities. This recalibration may result in higher operational costs, particularly for SMEs. Larger corporations may have the financial resources to absorb these changes, but smaller businesses could face significant challenges, writes Vermelo RPO on LinkedIn. For some, higher labor costs might necessitate reductions in staff, adjustments to working hours, or scaled-back expansion plans to sustain profitability. However, this reform also presents opportunities. Businesses could benefit from increased consumer spending power, as workers with higher wages are likely to have more disposable income. This shift could stimulate local markets and drive demand for goods and services, fostering economic growth, explains Investopedia. Companies that adapt effectively to these changes may be better positioned to attract and retain top talent, as higher wages contribute to employee morale and job satisfaction.

While the wage increase is a critical part of Mexico's labor reforms, discussions around reducing the workweek are gaining momentum. The proposed changes aim to shorten the standard workweek from 48 to 40 hours, reflecting a shift toward work-life balance and employee well-being—a global trend. Chile is among the leaders in Latin America when it comes to work hours, averaging 1,953 annually, albeit significantly higher than the OECD average of around 1,715 hours. In Mexico, 27% of employees work excessively long hours, well above the OECD average of 10%, according to the OECD Better Life Index, as reported by MBN. This reform highlights that time outside of work is just as important as time spent on job tasks.

According to Indeed, reducing working hours offers numerous benefits for both employees and employers. A shorter workweek improves work-life balance by giving employees more time for family, appointments, and personal activities, which boosts satisfaction and loyalty. It also reduces commuting expenses, such as gas and public transport costs, providing a financial benefit. Health-wise, shorter workweeks lower stress levels, enhance mental well-being, and allow more time for exercise and relaxation, leading to reduced absenteeism. Moreover, these changes can increase productivity by allowing employees to focus on tasks, cut inefficiencies, and avoid burnout.

Adapting to a shorter workweek, however, will require a reassessment of workforce management practices. Companies may need to implement flexible work schedules, job redesigns, and prioritize productivity over the number of hours worked, as long working hours correlate with many negative effects rather than productivity, explains Activ Trak. 

The gig economy in Mexico has also seen rapid growth this year due to recent labor reforms. These changes require employers to include platform workers in profit-sharing schemes, register them with IMSS, and make contributions to the National Workers’ Housing Fund. This formalization aims to provide more stability and security for gig workers, a significant move toward reducing job precarity, writes MBN. However, Uber, DiDi, and Rappi have raised concerns, particularly regarding the fiscal framework and IMSS registration. These companies advocate for transitional provisions to clarify the registration process and suggest an accessible framework for broader participation in the digital economy. Despite these challenges, the gig economy remains a vital component of Mexico’s labor market, and these reforms could enhance service quality and provide businesses with a more reliable workforce.