Labor productivity in Mexico stands at $30 per hour, in contrast to the $60 per hour average in advanced economies. In fact, productivity growth in Mexico continues to be one of the major challenges to economic development, having stagnated for 25 years, with an average annual growth of just 0.2%. For reference, Latin America as a whole, despite being the region with the lowest productivity growth in the world, achieved an annual increase of 0.8% over the same period.
In this context, the McKinsey Global Institute's (MGI) most recent report, " The Power of One: How Standout Firms Grow National Productivity ," shows us that companies have the power to accelerate national productivity. They achieve this through strategic and ambitious actions that improve their own results, which then become best practices within their industries, generating an economic boost. In Mexico, this knock-on effect is crucial for overcoming productive stagnation and activating a virtuous cycle of employment, investment, and growth.
The power of ambitious actions is already recognized by some large companies; however, many others—large, medium-sized, and small—may not realize they possess it. Unlocking this potential in more companies could boost both productivity and growth. In other words, Mexico needs companies to lead with strategic actions to increase their productivity.
According to the Bank of Mexico, productivity growth is essential to improving the population's standard of living and maintaining the country's competitiveness in the global market. Furthermore, it allows for more production with the same resources, which translates into higher incomes, better wages, and a greater capacity for investment in innovation and development. Productivity also generates direct benefits for consumers by increasing consumer surplus through better products, lower prices, and greater variety.
In Mexico, the dispersion of large and medium-sized companies is significant, with more than 90% being micro, small, and medium-sized enterprises. These companies are the driving force of the economy, generating a large portion of employment and the national Gross Domestic Product (GDP).
Talking about productivity in Mexico is more urgent than ever, especially because the demographic dividend, which fueled economic growth for years, now has an expiration date. The country's fertility rate, at 1.9 children per woman, is below the replacement rate, which means that in just five years—by 2030—we will have reached the maximum percentage of people of working age.
Understanding this, it's important to highlight that, according to our report, productivity isn't a constant, gradual phenomenon, but rather occurs in bursts, triggered by bold actions that introduce new ways of creating and scaling value.
This phenomenon has allowed a small number of leading companies to redefine productivity and their own growth. To gauge its impact, it is enough to note that just a dozen of the most prominent companies could have doubled productivity growth across their entire country. In the United States, for example, 5% of the companies evaluated accounted for 23% of employment and generated 78% of positive productivity growth.
Given this new way of understanding productivity growth, it is necessary to adopt a strategy focused on analyzing the achievements of those who truly make a difference. Companies can follow the example of these leaders, adapt these lessons to their own contexts, and eventually generate their own ideas capable of fostering new chain reactions. This involves identifying and scaling successful business models, investing in technologies that improve efficiency, and creating an environment that fosters innovation and creativity. Part of this strategy must also include creating conditions to attract leading companies from abroad, whose talent, capital, and experience can strengthen the local ecosystem.
This entrepreneurial ambition, when translated into concrete decisions and supported by the right partners, can have a systemic impact: increased productivity, job creation, investment attraction, and labor market formalization. In short, a stronger national economy, with a projection of scalable and sustainable growth.
This article was translated by Expansion and originally appeared in their publication.