MEXICO CITY, (Reuters) – Mexico’s government said yesterday a deal had been reached between employers, labor representatives and officials to raise the minimum wage by 20% 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, Labor Minister Luisa Maria Alcalde said during a regular news conference alongside President Andres Manuel Lopez Obrador.
The hike follows double-digit-percent 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% in an effort to tame price pressures.
Annual headline inflation in Latin America’s second-largest economy hit 8.14% in the first half of November, down from 8.53% 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%.
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, Labor Minister Alcalde said.
Workers along the U.S.-Mexico border will see wages rise from around 260 pesos a day to 312 pesos, Alcalde said.
Salaries in Mexico remain far below U.S. levels, however, where the federal minimum wage stands at $7.25 an hour.
