By José Roberto Balmori*
Last December 2024, more than 400,000 formal jobs were lost. This is common at year-ends; However, the balance in job creation indicates that the Mexican labor market has cooled. In this article I suggest some hypotheses as to why this may be happening, right at the beginning of the six-year term of the new Government of Mexico.
At the national level, the formal job creation rate last year was only 0.97%, the lowest figure in decades, when only years without economic crises are considered (2001, 2008-2009, 2020). In fact, we have to go back to 2003 to see such a poor balance. We can infer the clues from the same data.
On the one hand, the conclusion of the flagship works of the last federal administration is taking its toll on the creation of formal jobs in the states where said projects were carried out. In particular, the state that lost the most formal jobs was Tabasco (-12%), where a new refinery and part of the Mayan train were built. Likewise, another federal entity that is suffering strongly is Campeche (-4%), where the Maya train also passes, and which depends on Pemex suppliers, which have had to bear extraordinary financial costs.
If we analyze the data by sector, the data tells us exactly the same thing. In particular, the economic sectors that are suffering the most are construction, agriculture and manufacturing. As for construction, we know that much of this is due to the completion of the aforementioned projects. On the contrary, the agricultural and manufacturing sectors have cooled due to the national economic slowdown and the announced protectionism of our main trading partner, the United States. Specifically, many companies are preparing for a possible increase in tariffs once the new federal government of the United States takes office, as the incoming president Donald Trump has already announced.
Another possible clue is that labor productivity has not grown at the rate at which wages have grown. Although the minimum wage was at very low levels years ago, in recent years, said wage has grown rapidly (close to 15% annually). However, these increases have not been accompanied by a significant increase in labor productivity, which only grew 3% during 2024.
I consider this last point to be not as important as the completion of the works or the fear of protectionist measures by companies that depend on foreign trade. However, the Mexican Social Security Institute’s own data (IMSS) suggests that the percentage of total workers who earn less than two minimum wages increased from 39% in 2018 to 69% at the end of 2024. If the ranges of As wages are tightening within companies, these recent labor numbers could be the first sign that many companies are beginning to have difficulty hiring new workers due to wages.
Needless to say, there is still no scientific evidence that this is happening. However, it would be good for the government to investigate so that the conditions are generated that allow us to achieve the objective established for this six-year term, which is to bring the minimum wage to 2.5 times the urban income poverty line, which is little more of eleven thousand pesos at current prices.
To do this, the government could see if reducing payroll taxes on micro and small businesses can help create more jobs, while continuing with the objective of having better salaries for formal workers. This would undoubtedly be beneficial for the entire Mexican economy, if it is possible to do so. Meanwhile, in 2025 we will start the year with a cold labor market.
Contact:
*Dr. José Roberto Balmori, director of the undergraduate programs of the Faculty of Economics and Business of the Universidad Anáhuac México.
Twitter: @jrbalmori
The opinions expressed are solely the responsibility of their authors and are completely independent of the position and editorial line of Forbes Mexico.
Follow information about business and current events in Forbes Mexico
