Last year was Mexico’s worst year for formal sector job creation since 2020, when the COVID pandemic ravaged the Mexican economy. And 2025 could be even worse.
The Mexican Social Security Institute (IMSS) reported Monday that the number of workers registered with IMSS increased by 213,993 last year, a 67% decline compared to the 651,490 new formal sector jobs added in 2023.
Terribles datos de empleo formal -afiliación al IMSS- en 2024.
🚩En diciembre desaparecieron 405,259 puestos formales. Una barbaridad.
🚩Así, en todo 2024 se crearon únicamente 213,993 empleos formales.
Y el “únicamente” es porque deberíamos de estar creando más de 1M al año.— Valeria Moy (@ValeriaMoy) January 6, 2025
On X, economist Valeria Moy noted that Mexico should be creating more than one million formal sector jobs each year.
The total number of formal sector workers affiliated with IMSS — 22.24 million as of Dec. 31 — increased just 1% in 2024, two points below the 3% increase recorded in 2023.
The formal sector job creation result in 2024 was well below the 480,000 estimate of the Bank of Mexico.
It was the worst result since some 648,000 jobs were lost in 2020, when the Mexican economy contracted 8.5% due to the COVID pandemic and associated restrictions. Excluding 2020, the result was the worst since 2009, when around 172,000 formal sector jobs were lost.
Slower economic growth in 2024 was cited by analysts as a factor in the result.
Unemployment in Mexico remains low — the rate was 2.6% in November — but over half of Mexico’s workforce, some 32.8 million people, is employed in the country’s vast informal sector.
Worst December on record for job losses
IMSS reported that 405,259 formal sector jobs were lost in December, a figure “without precedent” for the final month of a year, according to the newspaper El Financiero.
The almost 214,000 new IMSS-affiliated jobs added last year is equivalent to just 0.6% of the total number of people employed in Mexico’s informal sector workforce.
The size of Mexico’s IMSS-affiliated workforce invariably declines in December as many workers’ contracts end that month. In addition, some employers lay off workers in December to avoid higher end-of-year employment costs only to rehire them in January. According to IMSS, almost 257,000 workers with indefinite contracts were laid off in December, a figure that accounts for 63.4% of all formal sector jobs lost last month.
César Salazar, an economics academic at the National Autonomous University (UNAM), said that the 2024 formal sector employment data is “highly influenced by the loss of jobs in December.”
However, he added that the low level of formal job creation in 2024 was “without doubt” linked to a slowdown in economic activity that “deepened in the final quarter of the year.”
In the first three quarters of last year, the Mexican economy grew just 1.5% in annual terms, well below the 3.2% rate recorded in 2023.
Alberto Alesi, general director in Mexico of staffing company Manpower Group, said that the pausing of some investment projects was also a factor in the low level of formal sector job creation in 2024. United States electric vehicle manufacturer Tesla is among the companies that have paused plans in Mexico due to political uncertainty generated by elections in the U.S. and Mexico last year.
Janneth Quiroz, director of analysis at the Monex financial group, noted that in 2024 Mexico’s labor market lost the dynamism it demonstrated in 2023, indicating that companies were more cautious about increasing the size of their payroll.
Which states and sectors lost jobs in 2024?
IMSS reported that 11 states recorded decreases in the size of their formal sector workforces in 2024. The Gulf coast state of Tabasco, where the construction of a new Pemex refinery created a large number of jobs in recent years, recorded a 12.2% annual decrease, more than any other federal entity.
The other states where the number of IMSS-affiliated formal sector workers declined were Campeche, Zacatecas, Baja California, Sonora, Morelos, Baja California Sur, Sinaloa, Veracruz, Chihuahua and Tamaulipas.
The year-over-year declines in those states ranged from 4.2% in Campeche to 0.2% in Chihuahua and Tamaulipas.
IMSS reported that the size of the workforces of two sectors decreased in 2024. The construction sector workforce was 6.3% smaller in December than a year earlier, while the number of agriculture sector workers declined 2.5%.
The decline in construction sector jobs was, in part, due to the completion of government infrastructure projects, including the Maya Train railroad, which is now fully open.
Which states and sectors added jobs in 2024?
The formal sector workforces of 20 states increased in size in 2024, according to IMSS.
México state recorded the strongest annual growth (4.4%), followed by Hidalgo (4.3%) and Guerrero (4%).
Only two other states recorded formal sector workforce growth levels above 3%: Chiapas (3.9%) and Guanajuato (3.6%).
Fifteen entities recorded increases of between 0.1% and 1.9% in the size of their formal sector workforces. Among them was Mexico City, which recorded a 0.2% growth rate.
There was a 0.0% variation in the size of the formal sector workforce in Durango, IMSS said.
The workforces of seven sectors increased, according to the IMSS data. The transport and communications sector recorded the strongest growth, increasing its number of workers by 3.9%.
The other sectors that increased their workforces were:
- Retail (2.8% growth)
- Electricity (2.3%)
- Company services (2.1%)
- Social and community services (1.9%)
- Mining (1.1%)
- Manufacturing (0.17%)
The labor market outlook for 2025
The rehiring of workers laid off in December should boost formal sector job creation numbers in early 2025.
Analysts at Mexican bank Banco Base, however, said that the 2024 data suggests that Mexico could “soon” record “negative rates” for job creation.
“However, it’s important to consider that the slowdown [in formal sector job creation] is occurring at a time when the unemployment rate is close to historic minimums,” they said.
Salazar, the UNAM academic, noted that economic growth is forecast to slow even further in Mexico in 2025, and acknowledged that such an eventuality would lead to a lower job creation level.
Quiroz also noted that GDP growth is expected to slow this year, and therefore predicted a weakening of the labor market and a possible increase in unemployment.
With reports from El Financiero, El Economista and Reforma
Source: Mexico News Daily
