Mexico Labor Costs: What to Expect in 2024

A new year is well underway, and companies continue to explore Mexico manufacturing as a growth strategy to accelerate production. However, before expansion begins, business leaders first question if there is enough labor to support it.

For decades, the availability of skilled, cost-effective labor has been one of the many reasons why this option has remained a competitive advantage. Fortunately, labor costs in Mexico have remained steadily low over the past several years. Yet, the demand for industrial talent has significantly gone up. Therefore, it’s important to note changes in both labor rates and trends and how they may affect expansion opportunities.

Here are a few changes to expect regarding current labor rates in Mexico, and how working with a shelter company can help U.S. and other foreign manufacturers succeed.

Minimal Salary Adjustments, More Competition

In 2024, the minimum salary for industrial labor costs in Mexico increased from $312 to $374 pesos per day, which equals approximately $22 USD per day. However, manufacturers need to keep in mind this is the base minimum for entry-level workers only, and in order to attract top talent, they should expect to pay more.

Salaries differ quite significantly between a non-skilled worker and a production manager. When calculating labor costs in Mexico, manufacturing companies must be prepared to make adjustments accordingly, depending on the number and types of roles needed. To keep up with worker demand, it’s typical for companies to offer higher salaries, more benefits, or both.

Adding Benefits to the Mix of What’s Mandatory

Those new to nearshoring to Mexico should familiarize themselves with the list of mandatory benefits required for industrial workers. These include:

● 12 days of vacation (increases by two days per year of seniority)
● 7 paid holidays
● 15 days of Christmas bonus
● 25% vacation premium
● Social security and retirement pension
● Housing credit
● Maternity and paternity leave

In addition, manufacturers also commonly offer a combination of extra vacation days, medical insurance, and bonus incentives to entice new workers and encourage current workers to stay. Since high employee turnover can become quite costly, it makes implementing a solid compensation and benefits strategy crucial.

Partnering with a Shelter Company to Save Costs

Though foreign manufacturers can take advantage of low labor costs in Mexico, offering the bare minimum won’t save companies in the long run. Rather, it serves as a drawback as workers will look elsewhere for employment, which is why staying ahead of labor trends is as important as knowing what changes in labor rates are taking effect.

One of the many benefits of working with a shelter company like IVEMSA is access to insights from multiple operations at once. This provides the ability to track trends faster and make adjustments accordingly. Salary and benefit changes remain at the sole discretion of each manufacturer. Having an extensive range of industry knowledge and expert advice to guide decisions can make an impactful financial difference when securing labor.

As part of its full suite of shelter services, IVEMSA can save manufacturers up to 30% on HR department costs alone and keep them on track with industry trends. This saves business leaders time, money, and stress when fulfilling the roles necessary to take their production to the next level.

Low labor costs in Mexico are one of the many reasons why U.S. manufacturers are considering nearshoring as an option in 2024. To learn more about securing cost-effective labor and how shelter services can benefit you, contact IVEMSA today.