How the increase in the minimum wage in Mexico will affect or benefit you

Leira Velázquez | Mexico City

Recently in Mexico a new minimum wage was approved, which from January 1, 2022 will be 172.87 pesos a day, just over 2,500 pesos a fortnightly or 5,000 pesos a month, but how does it benefit me?

To begin with, it was the National Commission for Minimum Wages (Conasami) who announced on December 1 that a 22% increase in the minimum wage had been authorized, since before it was 141.70 pesos, which is barely 4,151 pesos per month , that is, that the increase is more than 800 pesos per month.

According to Conasami, this would directly benefit 12 million workers, 30.5% of those registered with the Mexican Social Security Institute (IMSS).

Not all increase

Although the increase in the minimum wage was approved, not all workers benefit, since a large percentage of the population works with a wage higher than the minimum.

Currently there are about 12 million Mexicans who earn the minimum wage and the majority of them, about 11 million are in the informal sector, for which reason the president of Coparmex urged companies to raise the minimum wage in such a way that not only is the line of family well-being reached, but also pay salaries of at least 6,500 or 7,000 pesos per month, as well as comply with the legal benefits.

While people who do earn more than the minimum wage, for example, an office worker who earns around 8,000-10,000 pesos a month, this worker will not have an increase in his salary, in his case only the range that is located changes on the salary scale.

In other words, if with a minimum wage of 141.70 pesos a day he entered the range of earning 2 to 3 minimum wages, now with a salary of 172.8 pesos a day he would be between 1 and 2 minimum wages. Since his salary is 333 pesos a day, approximately.

How will the increase in price affect or benefit you? minimum wage in Mexico

In some companies, it is possible that they do generate an increase in the salary of their workers according to the inflation rate, so we recommend that you approach your Human Resources department to find out if you have this benefit, to improve your income.

Let's remember that it is the salary you manage, the organization of your expenses will facilitate the management of your income.

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A measure with economic and social benefits

For the Mexican Institute for Competitiveness (IMCO), the increase in the minimum wage is a regulatory policy that it can improve efficiency in the labor market, in addition to the fact that it is traditionally considered a matter of social justice.

For the authorities, making workers' income more competitive is a desirable goal. So is the development of public policies to protect the purchasing power of wages, so that the benefits of wage increases last over time.

With this, the IMCO proposes that an improvement in people's salaries means better job performance, as well as a way of preserving people's purchasing power in a scenario of high inflation rates where the basic basket is more expensive.

“Competitive wages enable a more dynamic demand for goods and services, which in turn can generate a virtuous cycle, with more savings and, therefore, a favorable climate for investment. In addition, the minimum wage lasted for almost three decades with stagnant purchasing power," IMCO explained in a report.

On the other hand, according to the Social Development Policy Evaluation Council (Coneval), the increase in inflation in Mexico has caused an increase in labor poverty of almost one percentage point, that is, around 1.2 million people stopped receiving a sufficient income to buy the food basket.

“The Mexican economy is going through a fragile recovery in an adverse global environment. The increases in the minimum wage that occurred between 2018 and 2021 had a positive impact and increased the efficiency of the labor market; for this reason, the space for subsequent increases is increasingly limited”, concluded IMCO.

Better conditions

The objective of increasing the minimum wage in Mexico has been for three main reasons, among them to face the increase in inflation, since it reduces the purchasing power of people and limits the consumption, which in turn ends up generating less economic growth in the country.

In addition to maintaining the purchasing power of people, an increase in the salary of workers is aimed at seeking better working conditions, however, a living wage is not enough to achieve this objective.

To achieve an improvement in working conditions, employers must guarantee health insurance, employer contributions, vacations, bonuses and other benefits stipulated in the Federal Labor Law.

José Medina Mora, National President of Coparmex (Employers' Confederation of the Mexican Republic), declared that “with the increase in the minimum wage by 2022, we will reach the line of individual well-being, in such a way that each person will have enough to acquire the food basket, the next goal is to reach the line of family well-being”.

Family well-being, considering that on average each family has 4 members and only two work, and ensuring that, with the salary of two people, all family members have the basic food basket.

This objective is proposed for 2024, in such a way that Coparmex would seek to propose increases to the minimum wage in 2023 and 2024.

He commented that this increase in the minimum wage will have less negative effects than in previous increases, since before the payment of traffic fines or even taxes, was considered based on minimum wages.

“The proposal to prevent this increase in the minimum wage from having greater consequences in the increase in the prices of products, will be that the increase in wages be at the same rate as inflation,” explained José Mediana , regarding the effect of inflation in Mexico.

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