Recently, the Mexican Institute for Competitiveness (IMCO) published its most recent edition of the State Competitiveness Index (ICE) 2023emphasizing the possibilities of nearshoring in Mexico and the importance of human capital at this stage.
The ICA is a tool to identify the strengths and weaknesses of entities. This analysis makes it possible to assess how attractive entities are for talent and investment, based on their living and employment conditions.
In the ‘Labor market’ section or sub-index, the body measures “the efficiency of the main production factor: human capital”, they explain in the study.
“Specifically, characteristics that are essential for the adequate performance of workers and employers are considered, since this is decisive to establish conditions for growth and development in each of the federal entities. Those states in which workers are more and better trained, and salaries are more competitive, are more attractive for talent and investment”, details the IMCO study.
The ICE is made up of 72 indicators and 10 sub-indices, based on which states are classified into six levels of competitiveness. Compared to the 2022 report, this year 10 states improved their position, 13 fell back and nine stayed the same.
When presenting the results of ICE 2023, IMCO stressed that in order to take advantage of the opportunities offered by nearshoring, both infrastructure and human capital are required.
The six elements analyzed to determine the competitiveness of the labor market are:
- Population with higher education
- Population with access to job training
- Average income of full-time workers
- Level of wage inequality
- Percentage of people with perceptions below the well-being line
- Proportion of the labor force with working days greater than the legal limit of 48 weekly hours
The states with the most competitive job market for nearshoring
The results of ICE 2023 reveal that the northern and central states of the country offer the best labor market and international openness. Meanwhile, in the south and southeast the entities are relegated.
After Sinaloa, the best states to work are Nuevo León, Baja California Sur, Jalisco and Sonora. For its part, Mexico City fell from position four to seven after two years in the top 5 best states to work for.
This 2023, the States with greater competitiveness at a general level are:
- sinaloathe best positioned entity in the labor market category.
- New Lion, stands out in innovation.
- Chihuahuathe best qualified in international opening.
- Yucatanexcels in rule of law.
- Mexico Cityis first place in economics.
On the other side of the table, the least attractive entities for employment are Chiapas, Guerrero, Oaxaca, Guanajuato, Tlaxcala and Puebla.
Sinaloa and Chiapas, the states that are located at the two ends of the list as the best and the worst to work for, have been in those positions for the last three years: the northern state since 2021, and the jewel of the southeast since 2001.
And the salaries?
The IMCO highlighted that, at a general level, the states advanced in the average salaries they offer. In this area, the national average is 8,707 pesos per month, that is, just over 500 pesos more than what was reported in ICE 2022.
However, wage inequality persists in the different regions of the country. Baja California Sur boasts the best salaries, with 12,934 pesos per month on average. This is 2.5 times more than the average salary in Chiapas, where they earn 5,209 pesos per month on average.
The proportion of workers with days of more than 48 hours per week also registered a very slight advance: it went from 26.4 to 26.3% at the national level compared to 2022. In this regard, the state with the worst score is Guanajuato (36%) and the best evaluated, Jalisco (16%).
These are the best positioned states for nearshoring according to the IMCO
According to the analysis of the Mexican Institute for Competitiveness, nearshoring is closely linked to the competitiveness of each State. They stress that “this is a unique opportunity to potentiate the sustainable growth of states.”
Improvements in the states will be a key factor to attract investment with the arrival of nearshoring in Mexico, which is the relocation of production chains by transnational companies.
The aspects to determine the level of competitiveness of a State in the face of nearshoring are:
- International opening. Foreign direct investment and export of merchandise.
- Innovation. Patents and economic complexity.
- Economy. Economic diversification and GDP in high growth sectors.
- Rule of law. Crime incidence and perception of security.
In the category of openness to the exterior, the difference between regions is very noticeable. The north of Mexico captures 46.6% of foreign direct investment, the center 42.4% and the south 11.1%. Jalisco and Mexico City stand out for concentrating close to half of all the dollars that are sent to the country.
“Nearshoring, that is, the relocation of production chains by transnational companies, is linked to competitiveness. The central and northern states of the country have better conditions to attract investments related to this phenomenon, which is explained by their deployment of logistics and energy infrastructure, a population with better access to education and health, and better industry integration. manufacturing with the exterior”, concluded the institution.
Editorial Team The editorial team of EMPRENDEDOR.com, which for more than 27 years has worked to promote entrepreneurship.