High minimum wage policy: driver of GDP in Mexico
A high minimum wage policy was one of the main drivers of higher economic activity in Mexico in 2022 over 2021, indicated The Mexico Equity and Income Fund, Inc.
As a result, there was an across-the-board increase in average annual real wages of 16% over four years.
The national minimum wage has increased 95.6% nominal and 194.6% in the Northern Border Free Zone (ZLFN) since the close of 2018.
In real terms, the increase is 62.8% national and 145.2% in the ZLFN with data as of August 2022, according to Mexico’s federal government.
Thus, the average IMSS contribution base salary was 484.34 pesos per day in August 2022, a real annual increase of 2.6% and 13.7% real since December 2018.
By wage zone, in the ZLFN it reached 516.45 pesos per day, a real annual increase of 5.5% and 22.2% since the close of 2018.
In the rest of the country it reached 480.42 pesos per day, a real annual increase of 2.2% and 12.7% since December 2018.
Of IMSS-registered workers, the 10% earning the least increased their average salary by 116% real since December 2018 in the ZLFN and 52.2% in the rest of the country.
As one moves up the wage distribution, the variations are smaller, pointing to a greater benefit to lower-income earners.
The government’s goal for 2024 is to reach twice the urban income poverty line, so that a working person and an additional household member can buy at least the food basket and avoid falling into poverty.
The value of the line as of August 2022 is 136.71 pesos per day, so the minimum wage should reach 273.42 pesos per day in real terms.
However, it is important to remember that the minimum wage is determined by the Council of Representatives of the National Minimum Wage Commission (Conasami) and in a tripartite manner between the labor, employer and government sectors.
Conasami sets the legal minimum wages, seeking to ensure congruence between the provisions of the Mexican Constitution and the economic and social conditions of the country, promoting equity and justice among the factors of production, in a context of respect for the dignity of the worker and his family.