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.

money money

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.

business 163464_1280

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.

RELATED NEWS

  • New oilfield found in the Gulf of MexicoNew oilfield found in the Gulf of Mexico
  • What changes does the new SAT invoice have?What changes does the new SAT invoice have?
  • Reducing deficits and recovering jobs, US goals in NAFTAReducing deficits and recovering jobs, US goals in NAFTA
  • Cancun, Acapulco and Los Cabos will have Tourist PoliceCancun, Acapulco and Los Cabos will have Tourist Police
  • Trump is running out of options to deal with north koreaTrump is running out of options to deal with north korea
  • China and Germany cover the leadership vacuum left by the United StatesChina and Germany cover the leadership vacuum left by the United States
  • UNESCO will add places to the World Heritage Sites listUNESCO will add places to the World Heritage Sites list
  • OECD sees pension collapse in Mexico within five yearsOECD sees pension collapse in Mexico within five years
  • BuffettBuffett's masterpiece will make him Bank of America largest shareholder
  • Pacific Alliance could be an alternative to TPPPacific Alliance could be an alternative to TPP
  • Mexican astrophysicist receives recognition from Queen Elizabeth IIMexican astrophysicist receives recognition from Queen Elizabeth II
  • The obstacles facing TrumpThe obstacles facing Trump's solar wall

Language

Mexico News Network
All rights Reserved 2017