Mexico Raises Minimum Wage by 20% Amid Inflation Concerns

On December 1, 2022, Mexico’s National Minimum Wage Commission (CONASAMI) announced to increase the general minimum wage to 207.44 pesos ($10.82) per day, and to 312.41 pesos ($15.73) per day in the Free Economic Zone of the Northern Border, effective January 1, 2023. The overall increase is 20% from last year, including a 10% direct increase and a fixed amount increase of 15.72 pesos. The reform is expected to impact one third of Mexican formal workers. For global employers who typically pay more than the minimum wage, the change still could potentially impact benefits like savings fund and food coupons.  

Double digit increases for four years  

The 20% increase is not a surprise as we have seen double digit-percent raises every year since AMLO took office at the end of 2018 - 16% in 2019; 20% in 2020; 15% in 2021; 22% in 2022 and 20% by 2023. The yearly raise is not only seeking to curb the country’s vast internal income disparity, also is one of the goals for the USMCA in order to keep jobs within the US and Canada.  

Additionally, one of AMLO’s campaign goals was to move Mexico up on the international minimum salary ranking. The increase in the minimum wage in the last three years has allowed Mexico to leave the last places and to place itself in seventh place out of 20 countries.  

Inflation concerns  

The administration stated that the last minimum wage increase was calculated taking inflation into account, particularly price increases for basic goods. However, Gabriela Siller, an economist at Banco BASE, pointed to the sharp and constant minimum salary raise and the lack of corresponding increase in productivity will add extra pressure to the existing high inflation.