OECD Employment Outlook 2026: Mexico
Table of contents
These country notes provide an overview of the labour market situation in each country based on data from OECD Employment Outlook 2026. This edition has a special focus on geographic disparities in jobs and incomes.
The OECD labour market remains resilient, with employment and labour force participation rates at record highs (72.1 and 76.7% in Q1 2026 on average across countries, respectively) and unemployment low by historical standards (4.9% in May 2026). However, there are increasing signs of weakening, including rising unemployment in many countries, slowing employment growth, and easing labour shortages. Due to the new surge in energy prices, real wages are expected to fall in many countries.
In Mexico, the unemployment rate stood at 2.7% in May 2026, broadly stable compared with the previous two years and the second lowest among OECD countries, after Japan. Labour force participation has also remained at stable levels, at 65.1% in Q1 2026, compared with 65.4% in Q1 2025, but continues to fall short of the OECD average. Women’s participation slightly increased, from 51.2% to 51.3%, while men’s participation declined from 81.3% to 80.6%, leading to a modest narrowing of the gender participation gap. Despite these developments, informality continues to account for more than half of total employment.
Labour productivity growth in Mexico has been relatively strong since the onset of the COVID‑19 crisis, standing out among OECD countries. Most recently, labour productivity increased by 1.96% over 2023‑2024, compared with 0.62% on average across the OECD, marking an acceleration from the (2019-2023) where average growth was 1.45%. The recent productivity gains in Mexico have taken place alongside a reduction in working hours, as average hours worked fell by 0.21% per year between 2019 and 2023, and by 0.52% per year between 2023 and 2025. This decline has been steeper than the OECD average, where hours worked fell by 0.20% per year between 2023 and 2025, although hours worked remain high by OECD standards.
Real wages in Mexico have continued to grow strongly. By Q1 2026, real wages were 15.1% higher than in Q1 2021, far above the OECD average increase of 1.2%. Real wage growth also remained robust over the past year, with a year-on-year increase of 3.9%, compared with 1.7% across the OECD. Minimum wages have played an important role in this trend. Mexico recorded one of the strongest increases in real minimum wages across the OECD, rising by 8.2% year-on-year in April 2026, compared with an OECD average of 2.7%. Since January 2021, the nominal minimum wage has more than doubled, increasing by 122.3%, while the real minimum wage rose by 68.0%. This dramatic rise in the minimum wage relative to median wages has translated into by far the largest increase in the Kaitz index across the OECD, with the minimum wage reaching 73.7% of the median wage in 2024.
Non-compete clauses – contract terms that prevent workers from moving to a competitor or starting a competing business – and related contractual restrictions are widespread across OECD labour markets. they covered about 30% of workers in 2025, and are increasingly used beyond highly specialised jobs. While firms may use such clauses to protect trade secrets or investments, evidence suggests they can reduce job mobility, weaken wage growth, slow knowledge diffusion and undermine productivity growth.
Although non-compete clauses are unconstitutional in Mexico, employer survey evidence suggests that they remain common in practice. According to employers, between 23% and 39% of private‑sector employees in Mexico are currently bound by a non-compete agreement, compared with an average of around 20% to 30% across surveyed OECD countries. Firms in Mexico also report an upward trend in their use, pointing to a growing reliance on contractual restrictions that may limit workers’ ability to move between jobs or start competing businesses.
As in several other OECD countries, non-compete clauses in Mexico extend well beyond high-skilled occupations, raising concerns about their justification. Between 10% and 28% of workers without access to confidential information, and between 20% and 37% of low-paid workers, report being subject to such agreements. In addition, around 54% of firms report knowledge of no-poaching or wage‑fixing practices in their industry, above the cross-country average of 48%.
Employment protection legislation shapes job security, labour market dualism and firms’ ability to adjust to economic fluctuations and structural change. Updated OECD indicators show large cross-country differences in dismissal regulations and notably restrictions on temporary contracts.
Employment protection legislation in Mexico is relatively strict for regular workers and has become stricter for temporary contracts in recent years. According to the OECD’s updated Employment Protection Legislation indicators, Mexico has an EPL score of 2.46 for dismissals of regular workers, including individual and collective dismissals, placing it as the 12th strictest country in the OECD. The relatively high score reflects in particular the regulation and enforcement of unfair dismissal provisions, as well as, stricter procedural requirements for collective dismissals.
Regulatory restrictions on temporary contracts have increased recently, with the indicator rising from 1.6 in 2019 to 2.9 in 2025. Currently, Mexico has the third-highest level of regulatory restrictions on temporary contracts in the OECD, after Türkiye and Spain. This tightening mainly reflects recent reforms aimed at addressing the misuse of temporary and subcontracted employment, notably the ban on temporary work agency employment introduced in April 2023. This reform is expected to reduce labour market dualism by limiting the use of temporary arrangements.
Contact
Valentina CONTRERAS (✉ valentina.contreras@oecd.org)
Stéphane CARCILLO (✉ stephane.carcillo@oecd.org)
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The full book is available in English: OECD (2026), OECD Employment Outlook 2026: Geographic Disparities in Jobs and Incomes, OECD Publishing, Paris, https://doi.org/10.1787/7e710f54-en.
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