Things That Matter

Thousands Of Mexican Workers Are Set To Get A Pay Raise After Companies Agree To Increase Wages But Will It Be Enough?

The national minimum wage in Mexico is just $5.10 USD per day. Although that number rises to $8.80 USD per day in the northern part of the country near the US-Mexico border. But, according to many reports, most Mexicans do not earn the minimum wage because there are so many loopholes in the laws.

One group of companies is working to better implement minimum wages and even one up the national standard by offering all of their employees a guaranteed monthly wage.

One hundred Mexican companies have announced they will raise the minimum monthly salary of their employees.

And, yes, this is great news for those workers. However, the increase will only bring the minimum monthly wage to $6,500 pesos (or roughly $340 USD). Yes, that’s $350 USD per month.

Corporate directors from Citibanamex, Corporación Zapata, Tajín and Grupo Pochteca, representing the 100-member organization Empresas Por El Bienestar (Companies for Wellbeing), told a press conference on Wednesday that the initiative will contribute to the construction of a “middle-class Mexico.”

“Starting from a base of the average home containing 1.7 workers, the 6,500-peso monthly payment will put us just above the poverty threshold determined by [the social development agency] Coneval,” they told reporters.

However, the companies in the group don’t actually have to participate if they don’t want to, leading many to question how effective the plan will be.

The company representatives emphasized that participation is not obligatory, but the group has been working on the initiative for five years and expects it to have a positive impact that will be reflected in the growth of the country.

“The impact in the short and long term will be positive, in the consumption and incomes of Mexican families. It will become a virtuous cycle and that’s why we’re making this sacrifice to push the country’s economy to be even stronger.”

They stressed that 48% of formal jobs in the country offer less than 6,500 pesos per month, but the companies in the group will all pay all their employees at least that much beginning on December 1.

Despite many businesses having held doubts about AMLO’s presidency and its effects on the economy, most of those have subsided.

Although the first year of President López Obrador’s administration has brought doubt to many in the private sector, the 100 companies see a more favorable and receptive environment ahead.

In accordance with what they have seen in the current international economic climate, they believe they can implement the change without causing higher inflation.

These 100 companies promise that the raise will not have a negative impact on prices, therefore it won’t have an inflationary effect. The objective is to increase the attraction of formal employment.”

A full list of the member companies to the group can be found at the 100 Empresas Por El Bienestar website.

Despite the proposed increase by these companies, the minimum wage across Mexico is still below the official poverty level.

Though, the country has taken several steps to increase the minimum wage for its workforce.

Starting in 2018, the minimum wage has increased each year. On January 1, 2019, the minimum wage increased by 6% to 102.68 pesos (US $5.10). At that same announcement, Luisa María Alcalde also announced an even bigger hike in the northern border area, where a free zone with lower taxes will be implemented at the start of next year. There, the minimum wage will double from its current level to 176.72 pesos (US $8.80) per day.

Speaking at an event attended by President López Obrador, other cabinet secretaries, members of the private sector and workers’ representatives, Alcalde said that for the first time in many years the minimum wage has been set at a point that is on par with the minimum threshold for individual wellbeing, or the poverty line, which is determined by the social development agency Coneval.

López Obrador, who has pledged that “the poor will come first” during his government, described the salary increase as “an historic event because together we begin a new stage in the salary policy of our country.”

However, even with the increase set to take effect on New Year’s Day, Mexico will continue to have one of the lowest minimum wages in Latin America.

The wage increase also comes shortly after the government raised the minimum wage for domestic workers.

The National Minimum Wage Commission (Conasami) has proposed setting the daily minimum salary for domestic workers at 249 pesos (US $12.70).

Commission president Andrés Peñaloza Méndez said that a Conasami study estimated that 90% of employers have the financial capacity to pay the wage proposed. Just over 1.4 million domestic workers, most of whom are impoverished women, are expected to benefit.

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