Mexico's Labor Income Surge Reshapes the Country’s Economic Landscape

Mexico's labor income has seen a notable increase between 2018 and 2024, contributing significantly to the reduction of income inequality, according to the National Survey of Household Income and Expenditures (ENIGH) 2024. This growth reflects the impact of recent labor reforms and evolving social assistance dynamics.

HR Policy Global’s Take: Rising labor income is a key driver behind the economic upliftment of Mexican households. For global companies, while rising labor costs driven by competitive wages and collective bargaining agreements pose challenges, they also represent a positive development for businesses as a stable source of consumption. Join us at our Mexico City Meeting on October 1^st for more discussions. 

Key Takeaways: 

1. Broad-Based Wage Growth Reduces Inequality

Mexico’s labor income surged 20% for most income percentiles between 2018–2024, driving a 3.6-point drop in inequality (Gini coefficient). Average monthly household income rose 10.6% (real terms) to MX$25,955, with labor now comprising 65.6% of income (ENIGH 2024). Critically, lower-income households saw outsized gains—offsetting declines in government transfers. 

2. Labor Reforms Accelerate Formalization

Recent policies triggered a record 1.26M new formal jobs (IMSS July 2025), pushing total formal employment to 23.5M. Landmark inclusion of platform workers—now classified as employees with benefits—reflects Mexico’s push to formalize digital labor. 83% of these workers affiliate with single platforms, predominantly young males (<30). 

3. Implications for Businesses

Rising purchasing power among lower/middle-income groups signals expanding consumer markets, while tighter labor markets may increase wage pressures. Companies should note: 

• Compliance focus: Stricter union transparency/CBA reviews (biennial) under labor reforms. 
• Capital income gap: Underreported in surveys (just 6-7% of ENIGH data vs. 40% of GDP), suggesting future regulatory attention.

What's next: The government aims to address challenges in union accountability and social program targeting.

• Efforts are being made to better reflect capital income in future surveys to provide a more accurate economic picture.

The Ministry of Labor and Social Welfare continues to focus on policies that promote inclusive and equitable growth.