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The Mexican government announced on Thursday it will increase the minimum wage by 15 percent in January, bringing it up to the equivalent of roughly $7 a day.
The Mexican government announced an increase of 15 percent in the daily minimum wage for Mexican workers beginning January to reach the equivalent of about $7 a day. The new wage will still fall below $1 an hour but is well above the country’s current 3.3 percent inflation rate. Minimum wages in the northern part of the country, where the cost of living is higher than in southern regions, will also rise 15 percent to about $10.70 a day.
ILO Praises Mexico for Labor Reforms Amidst COVID-19 Pandemic
President Andres Manuel Lopez Obrador said on Thursday the business sector had rejected the 15 percent proposal and proposed instead an increase of 10 percent but was outvoted by labor and government representatives within the debate in the 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 — at the same level as Haiti´s— and the lowest within the Organization for Economic Cooperation and Development. Despite that fact, 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, the third under his administration, following one of 16 percent and a second of 20 percent in the previous two years, 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...for over 30 years, workers’ salaries were punished.”