Mexico: Employment Reforms Proposed

Although it has only just begun, President Andrés Manuel López’s regime is already being referred to as a new era for politics in Mexico. Together with his current administration, López has come up with the 2018-2024 Nation Project designed to address issues related to economic, educational, and social matters.

The primary purpose of the proposals within this project is to pave the way for policies to advance Mexico’s development.

2018-2024 Nation Project

The project, developed in collaboration with a group of specialists from different sectors, includes a series of reform proposals on employment matters in Mexico. All proposals were created with the interest of employees at their core and are designed to improve employment conditions.

Scope of Proposals

Tax Policy

Throughout his campaign and after his electoral victory, President Andrés Manuel López Obrador has advocated for the following tax policy proposals:

1.No increase of tax rates in real terms; income tax and value added tax are expected to be reduced for border regions.

2.Improvements on tax collection.

3.Reassignment of public expenditure.

4.Creation of a non-partisan Fiscal Council to oversee internal revenue and public spending policies; enhance focus on reducing government expenditures.

5.Creation of a public-private investment fund to deploy infrastructure projects.

6.Emphasis on maintaining financial and tax discipline.

The proposed tax policy includes these main economic measures:

Decrease of Value Added Tax (VAT) at the border, from 16% to 8%
– The proposal of 8% is applicable in the region of northern Mexico related to the activities and material delivery of goods or services made by residents of the region. The 8% value added tax is applicable when goods and services are temporarily rendered in the border region.

Decrease of the Federal Income Tax (FIT) for companies at the border region from 30% to 20%
– The income of Mexican residents, no matter the source, will decrease from the actual rate of 30% down to 20%. This proposal pretends to create a better business environment in the Northern region of Mexico to make this region more competitive.

Decrease of the Federal Income Tax from 30% to 24% to companies certified as sustainable or ecological
– This aspect of the proposal applies to companies certified as sustainable or ecological and who grant annual salary increases to all employees, equivalent to increase in productivity. The benefits from this proposal are to improve competitiveness in Mexico in relation with the tax reform in the USA, and to improve environmental competitiveness.

Discounts rates and 0% rates on Special Economic Zones
– There are five states within the national territory of Mexico designated as special zones: Lazaro Cardenas-La Union (Michoacan, Guerrero); Coatzacoalcos, Veracruz; Salinas Cruz, Oaxaca; Puerto de Chiapas, Chiapas. These zones will be subject to the following:

  • 100% discount on FIT for the first 10 years
  • 50% discount on FIT in the next 5 years
  • 0% rate on VAT tax on purchasing articles on national territory
  • 25% additional from deductible expense to those who train employees within a special economic zone applicable against income within the zone
  • Tax credit against FIT caused from the 50% of the employer contribution during the 10 first years, and 25% during the subsequent 5 years.

 Collective Bargaining

A new agency will be created to promote collective bargaining for every industry, consisting of professional teams that will encourage dialogue between employers and employees through efficient collective negotiations with the aim of improving labor conditions and productivity. Union activity will be open and transparent, and organizations will allow employees to have access to unions and actively participate in union activities in their companies.

 Job Opportunities

A domestic digital platform will be created as a link between job seekers and job openings for eligible candidates.

 Job Professionalization and Training

The project calls for the implementation of programs to train and increase the professional capabilities of individuals, regardless of whether they are employed, so that they can have access to, or improve their chances of accessing, the labor market. This would involve imposing an obligation on companies to offer professionalization and training courses for their employees.

 Certification for Job Qualifications and Skills

The project calls for the strengthening of a free-of-charge certification program for individual skills, abilities and qualifications for individuals who do not have degrees or equivalent credits awarded by educational institutions.

 Increased Monitoring of Employers

The new government plans to expand the number of labor inspectors in order to increase inspections of employers, to verify their compliance with labor laws and regulations.

In addition, updated inspection protocols and programs will be introduced for a variety of industrial activities, which will be coordinated with the tax and social security authorities. Inspection procedures will also be improved in order to assure compliance with the law by employers in areas such as outsourcing schemes, social security registration, profit-sharing payments and collective bargaining transparency.

 Fair Employment Certification

A fair employment certificate will be proposed to publicly recognize employers who pay reasonable wages to their employees. This will confer an additional benefit on the employer, with a distinctive logo on their products so that consumers can become aware of their fair employment practices.

 Minimum Wage

The project includes a proposal for an annual increase of the minimum wage at the rate of 15.6 percent plus inflation, so that at the end of the six-year presidential term, the minimum daily wage will be MXN 171.00 ($9.04) as opposed to the current MXN 88.36 ($4.67).

 Repatriated Migrant Workers

Supportive programs for Mexican repatriated migrants will be strengthened to improve their skills and interests and facilitate their assimilation into new jobs and return to their communities.


As of now, there isn’t a legislative timetable for the implementation of the project and its proposals. Nonetheless, there is a very high likelihood that they will become laws in high view of President López’s electoral makeup.

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