Mexico’s Minimum Wage Increases Nearly 10%By Elliot Bullman
Mexico’s minimum wage rose almost 10% on Sunday, in a jolt to the system meant to stoke the poorest workers’ buying power, which has been eroded by recessions and past bouts of high inflation.
But the prospect of higher earnings is doing little to dent pessimism among consumers, who head into 2017 facing rising fuel costs, higher interest rates and a weakening peso that closed 2016 near record lows against the U.S. dollar.
Labor, government and business leaders on the Minimum Wage Commission agreed to raise the daily minimum wage to 80 Mexican pesos, or about $4, from 73 pesos, a break from a years long custom in which annual increases were roughly in line with inflation.
Mexico’s discussions on raising the minimum wage coincide with moves in the U.S., where some 4.4 million workers in 20 states are set to receive increases at the beginning of the year. That has also fueled debate on whether it will make U.S. employers reluctant to hire.
The commission split the increase into two parts: Four pesos a day to restore purchasing power and on top of that 3.9%. Authorities hope the 3.9% will be used as the benchmark for other wage negotiations, avoiding the so-called lighthouse effect where minimum-wage increases fuel demands across the board and threaten an inflationary wage spiral.
The minimum-wage increase followed several years of studies and discussions on the effect it could have on productivity, employment, and inflation.
Around 15% of the country’s 52 million workers make minimum wage, according to government data. Most of them are employed informally, and a majority contribute less than half of their household income, so many households survive because they have several wage earners.
“It would be a utopia to think that a family lives on 74 pesos a day], not even one person lives on 74 pesos,” Carlos Acevez del Olmo, secretary-general of the Mexican Workers Confederation, said at a news conference.
- Southwest Airlines inaugurates new international route to Cancun from New Orleans
- The Federal Aviation Administration has ordered airlines to inspect certain older CFM56-7B turbofan engines.
- North Korea 'halts missile and nuclear tests', says Kim Jong-un
- Frida Kahlo Barbie doll banned from shop shelves in Mexico
- NAFTA meeting on tap; Mexico doesn’t want to be used to elude US tariffs
- Mexico is second on world’s best places to retire list
- New video editing trend could be the future of ´fake news'
- Trump says North Korea talks under way but he may not meet Kim Jong-un
- Mexico’s candidates are avoiding talking about the elephant in the room: Pensions
- Elon Musk just sank more than $100 million into The Boring Company
- Netflix is soaring after it crushed subscriber growth targets yet again
- Starbucks: Protesters call for boycott after black men arrested