Mexico is grappling with a structural issue as millions of family-owned businesses survive but fail to thrive, largely due to informal operations and rising operational costs.
Mexico faces a pressing structural challenge, rooted in its reliance on family businesses that, while resilient, struggle to achieve substantial growth. Currently, there are over 6.1 million micro, small, and medium enterprises (MiPyMEs) in Mexico, comprising 99.8% of economic units. Alarmingly, 67% of these businesses operate in the informal sector, indicating that most small enterprises exist outside the formal economy not by choice but out of necessity, highlighting the difficult conditions they face in pursuing legitimate business operations.
In recent years, the business landscape has deteriorated further, evidenced by a significant decline in registered employers with the Mexican Social Security Institute (IMSS), with 43,578 registrations lost in the last two years — the largest drop since 1998. These figures translate into real-life consequences: the closure of businesses, loss of jobs, and setbacks for families who rely on these enterprises for their livelihoods. Such economic instability raises serious concerns about the future viability of family businesses in the country.
Amidst these challenges, discussions about potential reforms, such as reducing the workweek to 40 hours, have emerged. While the intent behind such social initiatives is commendable, the implementation is fraught with difficulties. Business representatives warn that many companies could face cost increases of 15% to 20% in order to maintain operations, which could further jeopardize their sustainability and exacerbate the existing issues within the informal economy.
