Greater informality aggravates the structural challenge in the labor market

The expansion of the phenomenon of informality in Mexico is beginning to direct the labor market towards a phase of structural weakness, economic experts said.

According to Janneth Quiroz, director of economic analysis, exchange rate and stock market at Monex, informality in the country is the great challenge for the labor market and the economy, since 32.7 million people worked in informal conditions at the end of January 2026; while the informality rate, the employed population that does not have access to social security, benefits or legal protection, was 54.9 percent; that is, more than half of the employed people in the country.

“Unemployment remains low in historical terms, but the quality of employment and informality continue to be the great structural challenge,” warned Quiroz.

Meanwhile, Gerónimo Ugarte, chief economist at Valmex Casa de Bolsa, assured that the Mexican labor market is not in crisis, but it is in a phase of structural weakness, towards greater informality.

He explained that the sustained loss of employers in Mexico may generate a lower capacity to generate formal employment and that an increase in the informal sector is being seen. Last year alone, 25,667 employers unregistered from the records of the Mexican Social Security Institute (IMSS), and, if compared with all the variations of this century, it is the largest. In the pandemic, 1,379 employers were lost and it is consistent with this step towards informality in the labor market.

Ugarte recommended that this structural change towards less informality should be addressed. The sustained loss of employers is not only causing a slowdown, but also a deterioration in the capacity to generate formal employment.

The first warnings in 2025

“In 2025 there was a worrying sign: on the one hand, the generation of employment, such as the loss of employers in the IMSS, due to having a lower future capacity to generate formal jobs. The lower business dynamism and the structural change in employment, which is the most worrying, which is the increase in the informal economy.”

This is why the labor market may remain weak in 2026, affecting the component that represents two-thirds of GDP: private consumption.

During the first month of the year, by occupation position, the growth of self-employed workers predominated (448,444), to the detriment of subordinates and paid workers with a drop of 547,793 positions.

Mexico does not have a national unemployment insurance system, which encourages people to accept any activity that generates income, even if it is precarious. This reduces the probability that someone will declare themselves unemployed, since many opt for self-employment or informal jobs, explained Guillermina Rodríguez, deputy director of economic studies at Banamex.

in the studio The hidden effects of social programs in the labor marketRodríguez addressed subsidies as a factor that would influence decisions to join (or not) the labor market.

The expansion of money transfers by the government is one of the many factors that could influence individuals’ decisions to enter the labor market, in addition to low prospects for economic growth or personal factors.

Specialists consider that to raise the quality of employment, reforms to laws are required that encourage greater labor participation as an employer and that promote the formalization of work in the country.