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Last updateFri, 12 Oct 2018 11am

Minimum wage to go up 10.4% on December 1

The country’s lowest earners will get an early Christmas present after the Mexican government announced this week that the country’s minimum wage will increase by 10.4 percent on December 1. 

This is the highest annual rise for more than a decade.

pesos

Although this sounds like a substantial hike, the minimum wage will only go up a little more than eight pesos a day, from 80.04 to 88.36 pesos.  That’s equivalent to US45 cents a day.

The increase falls short of the recommendation made recently by Copamex (the National Employers Association) to raise the minimum salary to 95.24 pesos.

According to a report from Coneval, a social welfare think tank that advises the federal government, the bare minimum a person needs to live a dignified life in Mexico is 2,822 pesos a month, equivalent to 94 pesos a day.  Obviously, this figure rises for a family, meaning that the upcoming wage hike will only make a minimal improvement to the living standards of the country’s poorest people.

There are no published figures as to exactly how many Mexicans earn the minimum wage.  However, international organizations, such as the World Bank, have estimated that a quarter of all Mexicans are living below the breadline, and can be classified as in “extreme poverty.”

The announcement came a month earlier than usual, since annual wage hikes usually take effect on January 1.  One reason for this may be the ongoing renegotiation of the North American Free Trade Agreement (Nafta), which has reached a tricky stage, with the United States accusing Mexico and Canada of stalling – and viceversa.

A key demand from U.S. negotiators is that Mexico raise its salaries to create a more level playing field, and put a brake on U.S. companies moving jobs south because of the attractive low wages here.

The early announcement of the wage increase could be Mexico’s way of offering an olive branch to the United States.  The Mexican economy would likely take a huge hit if the Trump administration decided to ditch the two-decade-old agreement, as the U.S. president kept promising during his campaign.

But even a 10.4-percent hike may not be enough to appease the U.S. team. The disparity in earnings between the two countries will remain stark: the national minimum wage in the United States currently stands at $US7.25 an hour, almost 12 times higher than in Mexico.

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