Subcontracted Personnel Fell 89.4% Due to Outsourcing Ban

This article by Alejandro Alegría appeared in the July 26, 2025 edition of La Jornada, Mexico’s premier left wing daily newspaper.

The number of workers with subcontracting positions plummeted 89.4 percent in 2023 compared to 2018, a “significant decrease” explained by the labor reform on outsourcing that went into effect in 2021, according to data from the National Institute of Statistics and Geography (INEGI).

The 2024 Economic Census published by the autonomous agency indicates that prior to the changes implemented during Andrés Manuel López Obrador’s administration, outsourcing, which in addition to registering workers with the IMSS with lower than actual wages and also represented a form of tax evasion for companies, was a growing practice.

The 2008 census showed that 11.6 percent of people working in the formal sector were hired under this model, a figure that rose to 14 percent in 2013, and by 2018 it represented 15.2 percent of the country’s workforce.

“Outsourcing has been growing in recent census events, and it decreased substantially in 2023,” said Gerardo Franco Parrilla, deputy director general of Economic and Agricultural Censuses at INEGI.

According to the autonomous organization, workers who were working under the subcontracting scheme were integrated into the other classifications.

Paid staff, that is, employees hired by the company for which they provided services, increased from 59.9 percent in 2018 to 73.7 percent in 2023.

The proportion of owners, family members, and other unpaid workers that was reconfigured, from 22.8 percent in 2018, increased to 23.4 percent. Meanwhile, fee-based or commission-based employees saw a decrease from 2.1 percent to 1.3 percent.

“The reform on human resource outsourcing had a significant impact, reducing the services offered by companies in the sector,” INEGI emphasized.

He noted that the number of employed personnel supplied by another company with a demand-driven approach fell from 4,128,000 workers in 2018 to just 438,909 in 2023, a decrease of 89.4 percent compared to 2018.

From a supply-side perspective, under branch 5613 Employment Services, companies providing this service reported 1,376,000 people employed under this scheme in 2018 and 131,000 in 2023, representing a 90.5 percent decrease compared to 2018.

The autonomous body noted that the 2021 labor reform does not prohibit subcontracting, as some activities are permitted and others are not.

Official data show that before 2021, 83 percent of companies in the country maintained this employment scheme, and 75 percent of the people reported to the IMSS were registered with pay increases lower than they were earning and in activities different from those they performed.

More Informality

On the other hand, INEGI reported that informality in economic sectors increased in 2023 compared to 2018, mainly in commerce and services, an activity that provides two-thirds of the country’s gross domestic product (GDP).

While the number of economic units in the manufacturing industry was 69.1 percent informal, according to the latest census it rose to 71.6 percent.

The number of service businesses that do not offer social security or benefits, do not use an accounting system, and other characteristics that define informality increased from 62.1 percent in 2018 to 63 percent in 2023. In commerce, it stood at 65.1 percent, down from 63.1 percent five years earlier.