Introduction
The implementation of a 40-hour workweek is on the horizon in Mexico. In theory, the new law will be ready for discussion in Congress on September 1st. On June 19th, discussions began to address the implementation details. The question remains: will we be able to create the best possible reform or will we settle for a Frankenstein scenario where good intentions collide with the worst of reality?
Importance and Scope
This topic is of paramount importance, as it will directly impact the lives of 6.58 million businesses and over 30 million workers in Mexico, primarily employed in the formal sector. Indirectly, it will affect the 32 million working in informality. Public sector employees are unlikely to be affected, as they operate in a separate reality.
Global Trend and Mexican Context
The government aims to maintain a dynamic of labor changes that yielded positive results in the previous six-year term, including salary minimum increases and pension boosts. Moreover, this move aligns with a global trend that resonates in Mexico due to several factors. Two stand out: Mexico works long hours but has low productivity. On average, a Mexican worker logs 2,137 hours annually, compared to 1,400 in Germany. Regrettably, the 2,137 hours here yield less than the 1,400 in Germany.
Benefits and Challenges
This reform offers workers a better work-life balance, while businesses face the challenge of managing increased costs and reorganizing work methods. If successful, the government can boast that its labor agenda continues to bear fruit.
Gradual Implementation and Sectoral Differences
During the first implementation forum, gradualism was a recurring theme. There seems to be consensus, but the gap between sectors is vast. Labor representation wants changes within two years, while the government proposes a timeline concluding in 2030. Business organizations advocate for a longer period but suggest starting the reduction immediately. It’s clear that implementation methods must vary across activities or sectors, as the approach differs between commerce, mining, and commercial aviation.
Potential Pitfalls
Mexico proposes an ambitious reform during a challenging economic period: GDP growth is nearly non-existent in 2025, and formal job generation is dwindling. Uncertainty looms from Trump’s tariffs and migration policies, along with the shadow cast by judicial reform. Reducing from 48 hours in 2025 to 40 hours in 2030, as planned by the government, is a faster transition than Chile and Colombia experienced.
Support for Businesses
Given the tight budget, the government has limited room for maneuver. However, some form of support is necessary. Assuming all businesses can absorb a minimum 20% labor cost increase is absurd. Smaller businesses will struggle more to adapt and comply with the law amidst survival challenges.
Protecting Workers
In countries that reduced work hours, incomes decreased, particularly for lower-wage earners. Chile saw more part-time hirings and increased job precarity. It’s crucial to prevent a formal-to-informal sector exodus.
Policy Evaluation and Adjustments
An ambitious reform like this requires monitoring to assess implementation progress and make necessary adjustments. This entails dialogue with employers and employees, data production reflecting labor market pulse and company life, non-ideological statistics interpretation, and swift public sector decisions.
Key Questions and Answers
- Why is the 40-hour workweek being pursued now? The government aims to maintain labor change dynamics that yielded positive results previously, such as salary minimum increases and pension boosts. It also aligns with a global trend where Mexico works long hours but has low productivity.
- Who will be affected by this reform? The reform will impact 6.58 million businesses and over 30 million workers, primarily in the formal sector. Indirectly, it will affect 32 million informal workers. Public sector employees are unlikely to be affected.
- What challenges does this reform pose? Businesses face the challenge of managing increased costs and reorganizing work methods. Smaller businesses may struggle more to adapt and comply with the new law.
- How will workers be protected from negative side effects? Measures must prevent income reductions, especially for lower-wage earners, and avoid a formal-to-informal sector exodus.
- Will there be policy evaluations and adjustments? An ambitious reform requires monitoring, data production, non-ideological statistics interpretation, and swift public sector decisions for necessary adjustments.
