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News Article

CONASAMI Goes 50 Percent Minimum Wage Increase by 2024

By Anamary Olivas | Tue, 08/23/2022 - 18:08

The National Minimum Wage Commission (CONASAMI) seeks to increase the minimum wage by 50 percent due to strong inflation. Wages are insufficient for Mexicans to keep their same living standards, said the commission.

 

In 2021, when inflation stood at 6 percent, the federal government intended to reach a general minimum wage of US$11.18 per day at the end of its six-year term. One war in Europe as well as several hikes in the prices of energy and products of the basic basket later, inflation stands at nearly 8 percent. Therefore, the new goal is a minimum wage of US$12.86, which implies an increase of 50.4 percent compared to the level of US$8.56 in force this year.

 

“If we add to this that the National Council for the Evaluation of Social Development Policy (CONEVAL) updated its wellness line and incorporated new products, the basic basket became even more expensive. That is why we reached US$12.86, a higher amount than previously projected,” said Luis Felipe Munguía Corella, President, CONASAMI to El Economista.

 

The adjustment happens because of inflation, but it is also inflation that endangers the new objective, he acknowledged. The increase in the Free Zone of the Northern Border (ZLFN) is a clear example that inflation is not the product of the increase in the minimum wage. In 2019, it almost doubled in that region, but the area nevertheless had the lowest inflation rates at that time.

 

Additionally, CONEVAL reported that more than 49.2 million people in Mexico receive an income below of that what is necessary to acquire a basic basket. Currently,  38.3 percent of Mexico’s laborers belong to the so-called working poor.

 

Raising the minimum wage has little bearing on business spending since company spending on inputs, rent, machinery, electricity, dividends, profits for shareholders, wages and benefits represent much more than the mere 9 percent spent on wages and bonuses. On the other hand, the benefit for the population earning the minimum amount and for those earning more is significant. For the poorest 10 percent of the population, the increase in the minimum wage has increased their average salary by 45.8 percent above the inflation rate, said Munguía.

 

CONASAMI does not yet have a final proposal for Mexico’s Congress. “Current projections are that inflation will close at around 8 percent, but if developments occur, it will be higher or lower than that. In addition, we must consider that the inflation in the products consumed by workers earning the minimum wage is a little higher,” stated the institution. CONASAMI’s technical work is to review the trajectory that the minimum wage must follow so that it can be increased without affecting the fundamental macroeconomic variables of inflation and employment.

Anamary Olivas Anamary Olivas Journalist & Industry Analyst