Mexico's low unemployment hides a crisis of informality and precarious work
Mexico’s labour market faces persistent challenges despite recent reforms. A new law now grants gig workers basic rights, yet enforcement remains uncertain. Meanwhile, informality and precarious employment continue to dominate the workforce. In early 2026, Mexico’s unemployment rate stood at just 2.4%—the lowest in the OECD. But this figure masks deeper issues. Over half of the country’s 61.3 million workers, 55% to be exact, operate informally, a rate unchanged since 2005. Formal jobs with full benefits have barely grown, even as wage employment inched upward.
The Critical Employment Conditions Rate (TCCO) reached 38.3% this year, meaning nearly four in ten workers endure precarious conditions. Recent reforms, like higher minimum wages and mandatory vacation time, have done little to improve stability. Women face even greater instability, with their less secure labour participation widening the gender pay gap. The core problem is not a lack of jobs but their quality. Informality, low wages, and weak protections remain entrenched. Even the new gig worker law, while a step forward, lacks clear mechanisms to ensure compliance.
Mexico’s labour market struggles with deep-rooted informality and stagnant formal employment growth. Despite low unemployment, millions still work without contracts or benefits. The latest reforms offer limited relief unless enforcement and structural barriers are addressed.
