In a bid to address poverty and improve the living conditions of the average worker, Mexico’s minimum wage is set to increase next year. A 12% wage hike was announced by Mexico’s Labor Minister Marath Bloanos during a press conference last week. The decision was not made by the minister alone and involved the three-party minimum wage commission that consisted of government representatives as well as labor and business reps who aided in the decision-making.
The wage increase in Mexico will go into effect on January 1, 2025. Despite the positive news, inflation and the overall drop in the value of the peso have added some caution to the excitement around the wage hike.
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Mexico’s Minimum Wage to Increase by 12% in 2025
According to the National Minimum Wage Commission, Mexico’s daily minimum wage will go up from 248.93 pesos this year to 278.80 pesos ($13.75) in 2025. The wages near the northern border of the U.S. are higher, so the wages here will rise from 374.89 pesos to 419.88 pesos. The 12% hike in Mexico is a good start but it has also been identified as one of the smaller increments seen in recent years.
According to Market Watch, this is also the first increase since Congress officially passed legislation to ensure that the annual minimum increases match or exceed inflation numbers. The inflation numbers have been marked at 4.4% for this year, with a potential decline to 3.8% in 2025, taking the data from the Bank of Mexico into account.
This proposed increase is compliant with the United States-Mexico-Canada Agreement and the recommendations provided by the International Labour Organization (ILO), which remains an authority in the area. Despite the increase, the impact of the wage hike in Mexico may not be as substantial as desired.
What Could Be the Financial Impact of the Wage Rise in Mexico?
The 2025 wage increase for Mexico is aimed at helping workers keep up with the rising cost of living so they can keep up with the shifting socio-economic context of the region. “We continue on the path to rebuild the minimum wage and the purchasing power of Mexican men and women,” Bolanos had said earlier.
Unfortunately for the country, the Mexican peso has fallen 18% in value over the last year when lined up against the U.S. dollar. The currency depreciation has offset the wage increase to a degree, which may mean that if the economic and inflation conditions do not improve, then the situation could remain unchanged for workers currently working minimum wage.
The double-digit hike was criticized when it was initially announced but President Claudia Sheinbaum has waved off these claims, with sights set on steadily bringing up the minimum wage further over the rest of her term, which extends until 2030.
The tight labor market with record low unemployment at around 2.5% from October could allow workers to have more bargaining power with employers for pay above the minimum wage proposed. For now, the increase should be helpful for around 37% of workers in the region at the least.
The DOL in the U.S. had also similarly hiked the minimum wage for workers, but the decision was eventually overturned by a judge, leaving employers and employees uncertain about their next steps.
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