Last updateSat, 22 Jun 2019 1pm

Minimum wage set to go up by 16 percent

Mexico will raise its minimum wage by 16.2 percent January 1, the biggest hike in 22 years.

billetes mexicanos

The basic daily wage in most of the country will increase from 88.36 pesos to 102.68 pesos a day (just over $US5).

President Andres Manuel Lopez Obrador promised further hikes above the inflation rate to help Mexico’s lowest paid workers recover their purchasing power, which he says has been decimated during recent presidential administrations.

Mexico looks set to end 2018 with an inflation rate of around 4.8 percent.

Lopez Obrador said the unusually high wage hike was not “a case for concern” and will be implemented with the full backing of the Banco de Mexico, the nation’s central bank.

However, the Banco de Mexico board voted December 20 to raise the interest rate by 25 basis points to 8.25 percent, its highest level since August 2008.

The central bank had previously raised concerns that the new government’s economic policies could provoke an inflationary spiral and said they were ready to take appropriate measures.

Although many workers earn more than the minimum salary, the annual hikes serve as a point of reference for increases to large numbers of low-income employees.

In the free zones along the country’s northern border – 43 municipalities – with the United States, wages will double to 176.72 pesos daily.

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