Analysis of the Reduction of the Workweek in Mexico: Impacts and Future Challenges
The debate over reducing the workweek in Mexico from 48 to 40 hours has gained momentum in recent months and is shaping up to be one of the most significant labor reforms on the national agenda. The initiative, which is currently under review in the Mexican Congress, proposes a scheme of five working days with two days off, without affecting workers’ base salaries. This has sparked intense debate about the potential economic and social consequences.
Various analysts, including experts from Banamex’s Economic Studies department, warn that the reform could increase labor costs and put pressure on micro, small, and medium-sized enterprises (MSMEs), which account for around 65% of formal employment and 40% of Mexico’s gross domestic product (GDP). The cost per hour worked could rise by as much as 20%, which Banamex estimates could lead to a reduction in national GDP of between 0.3 and 1 percentage points, in addition to a possible increase in inflation and a shift from formal to informal employment.
On the other hand, labor law experts such as Jorge Sales Boyoli, a member of the National Association of Business Lawyers (ANADE), argue that the impact would be more moderate and that the reform represents a modernization in line with international trends, as seen in OECD countries. They also point out that many Mexican companies already operate on a 40-hour workweek, which could mean the negative effects will be less severe than some predict.
International experience offers various lessons: Chile has gradually implemented a shorter workweek along with fiscal subsidies; France saw increased productivity but higher operating costs for small businesses; and Spain is moving towards shorter workweeks with positive results in terms of well-being. However, there are also cases such as Greece, where the lack of a productivity strategy led to reversing reduced work hours due to negative economic effects.
A key issue in the debate is the regulation of overtime hours, which in Mexico are paid at higher rates than in most OECD countries. Reducing the overtime limit and rethinking the payment scheme could help balance increased costs for companies, especially in sectors where long shifts are common, such as manufacturing and healthcare.
As for the impact on informality, several specialists point out that the relationship is not as straightforward as some suggest, since much of the informal sector operates outside labor regulations regardless of the official workweek. Nevertheless, the reform could motivate some small businesses to shift part of their operations to the informal sector to offset increased costs, unless clear and effective implementation support is put in place.
Looking to the mid- and long term, demographic change poses an added challenge: Mexico’s transition to an older population with a lower birth rate might require future adjustments to workweeks or even the importation of labor, as is happening in other countries with mature labor markets.
In summary, reducing the workweek in Mexico presents a complex scenario that demands a balance between modernizing the labor framework, protecting workers’ rights, and safeguarding business competitiveness. While the global trend is toward shorter workweeks and better living conditions for employees, the success of the reform will depend on gradual implementation, effective support mechanisms for companies, and a clear strategy to boost productivity.
In conclusion, workweek reform in Mexico represents an opportunity to align the country with international standards but also comes with significant economic and social challenges. A well-designed transition process, supported by specific assistance measures, will be crucial to mitigating risks and maximizing benefits within the national context.
