Uber Raises Fares Up to 7% in Mexico, Cites New Labor Costs

Uber Mexico announced fare increases of up to 7% across the country, blaming new labor reform requirements that grant employee status to app-based drivers earning minimum wage. Mexican authorities criticized the move as “unilateral and irresponsible.”

The ride-hailing company said the price adjustment protects driver earnings while covering costs from labor reforms that took effect in June. “We’ve implemented a necessary update to the pricing structure of trips, increasing by up to 7%, depending on the type of product and city, through the Uber app,” the company said in a press release.

Mexico’s Labor Ministry strongly objected to the fare hike. “The Ministry of Labor strongly condemns the unilateral and irresponsible fare increase announced by Uber, of up to 7%, citing, without any basis, costs associated with labor reform for digital platforms,” the ministry said in a statement.

The Federal Consumer Protection Agency also opposed the increase.

The price rise stems from Mexico’s sweeping labor law changes that recognize gig workers as formal employees for the first time. Workers who earn at least the minimum wage of 8,364 pesos per month ($445) now qualify for social security benefits, profit sharing and other protections.

Under the reform, companies must deduct 2.5% of monthly earnings from qualifying drivers to fund employee benefits. The law covers about 658,000 platform workers across Mexico, with roughly 272,000 earning minimum wage or more.

Mexico’s daily minimum wage increased 12% to 278.80 pesos ($13.75) in January, bringing monthly earnings for full-time workers to about 8,364 pesos. In the northern border region, where living costs are higher, the daily minimum reaches 419.88 pesos ($20.70).

A Social Security Pilot Program launched July 1 allows app-based workers to register for benefits from the Mexican Social Security Institute. The six-month program aims to test whether the new framework works without harming the institute’s finances.

Uber emphasized that fare increases go directly to drivers rather than corporate profits. The company said it remains committed to working with Mexican authorities on implementing the reforms.

For riders, the impact varies by location. Someone paying 100 pesos daily for Uber trips to and from work would see weekly costs rise from 500 to 535 pesos in areas with the full 7% increase.

The reform represents Mexico’s most significant effort to regulate the gig economy, joining countries like Spain and Chile that have extended labor protections to platform workers.

Digital platforms must now provide employment contracts, explain how their algorithms assign work, and allow workers to unionize. The law also grants workers the right to disconnect from apps without penalty.

President Claudia Sheinbaum’s administration has made protecting gig workers a priority. The reform was the 59th promise from her campaign platform, announced during her inauguration at Mexico City’s Zócalo.

Labor activists praised the changes as historic, saying they could influence similar reforms across Latin America. However, business groups warn the regulations could reduce flexibility that defines the gig economy model.

Uber previously warned that the reforms could eliminate earning opportunities for one in three drivers and result in 12 billion pesos in lost income industrywide.

The company has not announced when the price increases take effect. Uber operates in 31 Mexican cities, with fare adjustments varying by location and service type.

Mexico joins a growing list of jurisdictions worldwide requiring gig economy companies to treat workers as employees rather than independent contractors. The European Union, Singapore and Uruguay passed similar legislation in recent years.

New York City now requires app-based restaurant delivery workers to earn at least $21.44 per hour, showing the global trend toward greater platform worker protections.

The Mexican reform takes a more nuanced approach, distinguishing between workers who earn minimum wage and those who earn less. Lower earners remain classified as independent contractors but still receive workplace injury coverage during active work periods.

Companies face substantial fines for non-compliance, ranging from about $1,400 to $140,300 for various violations including failing to register employment contracts or properly implement algorithmic transparency policies.

Uber Mexico generated an estimated 73.13 billion pesos in economic value in 2022, according to company-commissioned research. The platform says 96% of its drivers cite flexibility as a primary reason for working with the app.

Despite government criticism, Uber maintains that price adjustments are necessary to preserve the platform’s viability under Mexico’s new regulatory environment. The company said it will continue engaging with authorities to ensure reforms work for all stakeholders.