Jan 2021: Mexico plans on increasing minimum wage by 15%

The Mexican government announced the country’s daily minimum wage will rise by 15 percent in January to the equivalent of about $7 a day.

The new wage still amounts to less than $1 an hour. But the increase is well above the country’s current 3.3 percent inflation rate.

Minimum wages on the northern border, which are higher due to higher costs of living, will also rise 15 percent to about $10.70 a day.

President Andres Manuel Lopez Obrador said on Thursday the business sector had proposed an increase of 10 percent, but was outvoted by labour and government representatives on the tripartite commission that determines minimum wages.

Lopez Obrador said, “workers are going to get an increase that is still, on the world scale, shameful.”

Mexico’s minimum wage is the lowest in the Americas on par with Haiti and the lowest in Organization for Economic Cooperation and Development.

But the Mexican Employers’ Federation said the increase and the coronavirus pandemic could force hundreds of thousands of small companies out of business.

“With the lack of government support and now, with an irrational, illogical increase in the minimum wage with no gradual stages, there is an increased risk that 700,000 business could disappear within the next three months,” the federation said in a statement.

Mexico’s economic output shrank by 18.7 percent in the second quarter, and was still down by 8.6 percent in the third quarter, largely due to the pandemic.

Lopez Obrador said the increase on top of hikes of 16 percent and 20 percent in the previous two years, since he took office in December 2018 was necessary to make up for decades in which the minimum wage declined in real terms.

“It is senseless to say this is going to affect the economy,” he said. “The purchasing power of the minimum wage must be recovered over 30 years, workers’ salaries were punished.”