Hiring in Mexico
Hiring Employees in Mexico – An Ultimate Guide
Hiring in Mexico presents a compelling opportunity backed by substantial statistics. With a workforce of over 53 million, Mexico offers a diverse talent pool spanning various industries, from technology to customer service. The country’s favorable time zone alignment with North America ensures real-time collaboration, with 84% of Mexican employees working in sync with U.S. business hours.
Moreover, Mexico’s cost of living is notably lower than that of many Western countries, allowing businesses to achieve cost savings while accessing skilled professionals. According to OECD study reports, over 18% of Mexican youngsters hold a bachelor’s degree or higher, signifying a robust educational foundation that contributes to the country’s growing reputation as a remote work hub.
These statistics collectively emphasize the strategic advantage of hiring remote employees in Mexico, enabling businesses to tap into a talent-rich market while maintaining operational efficiency and cost-effectiveness.
Overview of Mexico
Capital: Mexico City
Currency: Mexican peso (MXN)
Population: 129.88 Million (10th in world population)
Payroll frequency: Monthly
Timezone: UTC−8 to −5, in summer- UTC−7 to −5 (varies)
Cost of living rank: 89th out of 197
GDP per capita: $10,950
Mexico’s interesting remote work trends
Coderslink conducted numerous studies and analyzed compelling statistics regarding remote work trends in Mexico post-pandemic. Below are the findings:
- 42.1% of tech professionals favor full-time remote work.
- 26.6% prefer a hybrid work model, combining remote and on-site work.
- A significant 68.7% of tech professionals in Mexico lean towards some form of remote work.
- 24.7% express a preference for flexible working options, which may include variable hours or locations.
- Only a small 6.6% of respondents show a strong inclination for traditional on-site work environments.
Mexico’s tech talent pool stats you need to know
Mexico Tech Salaries Report offers key stats and info, helping you tap into Mexico’s thriving tech talent pool.
Here are some of the important things they have found this year:
- The average earnings for senior tech professionals in Mexico stand at approximately $4,285.99 monthly. These figures can fluctuate based on geographical location, educational qualifications, and additional considerations.
- Tech talent in Mexico is dominated by six key roles: full-stack developer, back-end developer, project manager, software engineer, data analyst, and tech support engineer.
- A significant portion of Mexican IT professionals possess strong English skills. Approximately 36.5% of them are at an intermediate level, 32.9% have advanced proficiency, and 14.5% are fully bilingual in English.
Employee laws in Mexico
1. Payroll contributions
Employers are mandated to make the following contributions, totaling around 36% of an employee’s gross salary. This places Mexico among the countries with the highest employer taxes globally.
|Social Security Contributions (IMSS)||Approx. 25% of the employee’s gross salary|
|Housing fund (INFONAVIT)||Around 5% of the employee’s gross salary|
|State payroll tax (depends on employee state and gross salary)||1.8% to 4%|
|Christmas bonus (Aguinaldo): 15 days of pay||4.11%|
|Vacation pay premium (A 25% salary premium needs to be paid for paid vacations. The Number of PTO in a year varies from 12 to 32 depending on the employee’s tenure)||0.82% to 1.5%|
Know more about Estimated payroll costs for employers in Mexico.
2. Christmas bonus or Aguinaldo
In Mexico, employers must provide a Christmas bonus, called Aguinaldo or 13th-month pay, every December. It’s typically at least 15 days’ pay, though some offer 20. To cover holiday expenses, it must be given before December 20th, often in the second week of December. Aguinaldo is mandatory, and part of labor laws, and non-compliance can lead to legal penalties.
3. Paid time-offs or vacation benefits in Mexico
|Years of employment||Vacation days in Mexico|
|1 year||12 days|
|2 years||14 days|
|3 years||16 days|
|4 years||18 days|
|5 years||20 days|
|6 to 10 years||22 days|
|11 to 15 years||24 days|
|16 to 20 years||26 days|
|21 to 25 years||28 days|
|26 to 30 years||30 days|
|31 to 35 years||32 days|
4. Weekly rest day and Sunday premium
In Mexico, employers must grant their workers a weekly day of rest, known as “Día de Descanso,” after every six days worked. Typically, this day falls on Sundays, though it can vary based on the employer’s discretion. On this day, employees are entitled to a break from work, with exceptions for emergencies. Additionally, some employers offer a “Sunday bonus,” a 25% salary boost to incentivize Sunday work when needed.
5. Overtime pay
Under Mexican labor law, employees can earn 200% of their standard wage for the initial nine weekly overtime hours and 300% for any additional hours worked.
6. Maternity leaves, paternity leaves and adoption leaves
- Maternity leave: Expectant mothers receive 12 weeks of paid leave, which can be used before or after delivery. It can extend by up to 8 weeks with a valid medical certificate for newborns with disabilities or requiring extended hospital care.
- Paternity leave: 5 days of paid leave are allowed for fathers.
- Adoption leave: Article 170 of the Federal Labor Law grants working mothers adopting a minor child a six-week paid adoption leave.
7. Severance pay
In Mexico, employers are legally required to provide severance pay when terminating an employee with over one year of service. The amount is determined by factors such as tenure, termination reason, and final salary.
8. Seniority premium or seniority bonus in Mexico
In Mexico, employees with 15 or more years of service can receive a seniority premium, a bonus equal to 12 days’ wages per year of commitment. This bonus recognizes and rewards their enduring loyalty.
Top 4 reasons why do companies hire from Mexico?
1. Proximity and time zone compatibility
- Mexico’s geographical proximity to the United States makes it an ideal choice for companies based in North America.
- The shared time zones simplify communication and collaboration, reducing real-time teamwork challenges.
2. Skilled workforce
- Mexico boasts a well-educated and highly skilled workforce across various industries, including IT, engineering, manufacturing, and more.
- Mexican professionals are often bilingual, with proficiency in both English and Spanish, facilitating seamless communication in international business settings.
3. NAFTA/USMCA trade agreement
- The North American Free Trade Agreement (NAFTA), now replaced by the United States-Mexico-Canada Agreement (USMCA), has created a favorable trade environment between Mexico, the United States, and Canada.
- Companies hiring from Mexico can leverage the benefits of this trade agreement, such as reduced trade barriers and enhanced market access.
4. Cost-effective labor force
- Companies often find that labor costs in Mexico are competitive when compared to other North American countries.
- This cost-effectiveness allows businesses to maintain high-quality talent while managing operational expenses effectively.
3 Best options to hire employees in Mexico
Global companies have three good ways to hire employees in Mexico. The one they pick depends on different things like how long they plan to stay in Mexico, how much money they have, how much time they have, what kind of workers they need, and how many workers they want to hire.
1. Set up an entity in Mexico
Creating a presence for your business in Mexico means you’re making it official in the country. This is like laying a strong foundation for your operations there, which includes hiring local people and doing business with Mexican customers.
When you establish a formal presence, it helps you follow the rules and regulations in Mexico and also makes it easier to work with clients and partners. However, this approach makes the most sense if your business has big, long-term plans in Mexico. If you only need a small, short-term team in Mexico without any long-lasting plans, then going through all these formalities might not be the best choice.
2. Partnering with Employer of Record Mexico
Working with an Employer of Record (EOR) in Mexico is a strategic move that can benefit companies in several ways. An EOR essentially acts as a local employer for your employees, taking care of important tasks like payroll, benefits, compliance, and administrative matters. This approach simplifies the process of entering the Mexican market, reduces legal complexities, and speeds up the hiring process.
By teaming up with an EOR in Mexico, businesses can quickly establish a legal presence in the country and tap into the local talent pool. This allows companies to concentrate on their core business activities while the EOR manages essential employment responsibilities, ensuring a smoother and more efficient operation.
3. Hiring independent contractors in Mexico
Working with independent contractors in Mexico is a smart way for businesses to get the skills and services they need. It’s flexible and efficient because it lets you bring in experts without the commitment of hiring them as full-time employees. Think of independent contractors as versatile tools for your projects – they’re there to assist with short-term tasks or specific jobs, allowing you to make the most of your resources.
However, there’s a big red flag to watch out for; misclassifying contractors. If you get this wrong, it can lead to serious problems like having to pay back wages, fines, legal trouble, a damaged reputation, and other headaches.
Cost of hiring employees in Mexico
In Mexico, when it comes to hiring someone, it’s not just about paying their salary and any bonuses they might get. There are other costs to think about as well, both direct and indirect. These costs are all part of what it takes to bring a new employee on board. Some of these costs include:
- Registration fees for setting up a Mexican entity
- Costs related to employment agencies if outsourcing is chosen
- Expenses for arranging or attending hiring events
- Advertisement expenditures for job postings
- Travel costs for hiring managers visiting Mexico
- Recruiter’s salary and time
- Candidate’s salary and bonus/incentive
- Relocation fees for new employees
- Fees for third-party background verification and reference checks
Mexico’s top 10 high-paying cities
|City||Avg. yearly salary (in MXN)||Avg. yearly salary (in USD)|
|Ecatepec de Morelos||547,200||32,285|
Top 10 high-paying jobs in Mexico
Here is a lineup of Mexico’s highest-paying jobs along with the average yearly earnings, sourced from Salary Explorer. This information serves as a valuable resource for employers looking to understand the current salary landscape for professionals in the country.
|Job Title||Avg. yearly salary (in MXN)||Avg, yearly salary (in USD)|
|International Banking Manager||890,400||52,534|
|Chief Financial Officer||824,400||48,640|
|Credit Portfolio Manager||812,400||47,932|
|Advertising Sales Director||682,800||40,285|
|Chief People Officer||652,800||38,515|
How Global Squirrels helps businesses find talent in Mexico?
Explore the exciting collaboration Global Squirrels brings to transform your employee hiring in Mexico. With our cutting-edge AI platform, we make finding top talent effortless, making your expansion plans smoother than ever. Concentrate on scaling your business and nurturing growth strategies while we shoulder the responsibility to hire a team in Mexico on your behalf. Bid farewell to the hassles of compliance, benefits, legal intricacies, and everything in between.