Narayan AmmachchiMexico’s wage commission (Conasami) decided to raise the minimum wage by 20% in January 2024, saying a pay hike is the best way to reduce poverty in the country.
This decision raises daily minimum pay from 207.44 pesos (US$12) to 248.93 pesos (US$14.22), marking a significant stride towards President Andrés Manuel López Obrador’s (AMLO) vision of economic equality.
However, economists caution that the rising wages could exacerbate inflation, which has already pushed benchmark interest rates to over 11%. This concern stems from the potential for businesses to pass on increased labor costs to consumers, fueling a price spiral.
Mexico’s strong peso, bolstered by high-interest rates and growing remittances, adds another layer of complexity. The peso’s 10% appreciation against the US dollar in the past year could dampen the intended benefits of the wage hike, as imports become cheaper and domestic goods less competitive.
AMLO, a fervent advocate for raising wages, inherited a minimum wage of a 88 pesos (US$5) per day when he assumed office in 2018. The president implemented a policy of yearly minimum wage increases, aiming for a nearly US$15 a day goal by the close of his administration in 2024.
During his usual morning media address, AMLO reiterated this stance, stating that the latest hike was “inevitable” to achieve his social justice goals.
In 2023 alone, wages jumped 20%. Since 2019, the minimum wage has seen consistent increases: 16.2% in 2019, 20% in 2020, 15% in 2021, and 22% in 2022.
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