Mexico to hike minimum wage by 20%
MEXICO CITY: Mexico’s government said on Thursday a deal had been reached between employers, labour representatives and officials to raise the minimum wage by 20 per cent in 2023.
The standard minimum wage will rise from its current rate of 172.87 pesos ($9.03) a day to around 207 pesos ($10.82) a day, labour Minister Luisa Maria Alcalde said during a regular news conference alongside President Andres Manuel Lopez Obrador.
The hike follows double-digit-per cent raises by Lopez Obrador’s administration every year since he took office at the end of 2018, seeking to curb Mexico’s vast income disparity.
The latest minimum wage increase was calculated taking inflation into account, particularly price increases for basic goods, Lopez Obrador told reporters.
“We don’t see any risk of inflation shooting up,” he said.
Mexico has been struggling to bring down stubbornly high inflation and the Bank of Mexico has increased its key interest rate by 600 basis points since mid-2021 to 10.0 per cent in an effort to tame price pressures.
Annual headline inflation in Latin America’s second-largest economy hit 8.14 per cent in the first half of November, down from 8.53 per cent a month earlier. Meanwhile, the closely watched core price index, which central bank board member Jonathan Heath called the bank’s biggest concern, continued to trend up to 8.66 per cent.
Gabriela Siller, an economist at Banco BASE, pointed to three reasons why she believes the planned wage increase will pressure inflation further, even if some salary hike was already baked into inflation forecasts.
“One, this is a very sharp increase; two, it’s not accompanied by gains in productivity; and three, we’ve had several years running with strong minimum wage increases,” said Siller.
Some 6.4 million workers will benefit from the increase, labour Minister Alcalde said.