On Sunday January 1st, Mexico’s minimum wage rose almost 10% in a jolt to the system meant to stoke the poorest workers’ buying power, which has been eroded by recessions and past bouts of high inflation.
But the prospect of higher earnings is doing little to dent pessimism among consumers, who start 2017 facing rising fuel costs, higher interest rates and a weakening peso that closed 2016 near record lows against the U.S. dollar.
Labor, government and business leaders on the Minimum Wage Commission agreed to raise the daily minimum wage to 80 Mexican pesos, or about $4, from 73 pesos, a break from a years long custom in which annual increases were roughly in line with inflation.
Mexico’s discussions on raising the minimum wage coincide with moves in the U.S., where some 4.4 million workers in 20 states are set to receive increases at the beginning of the year. That has also fueled debate on whether it will make U.S. employers reluctant to hire.
The commission split the increase into two parts: Four pesos a day to restore purchasing power and on top of that 3.9%. Authorities hope the 3.9% will be used as the benchmark for other wage negotiations, avoiding the so-called lighthouse effect where minimum-wage increases fuel demands across the board and threaten an inflationary wage spiral.
The minimum-wage increase followed several years of studies and discussions on the effect it could have on productivity, employment, and inflation.
Around 15% of the country’s 52 million workers make minimum wage, according to government data. Most of them are employed informally, and a majority contribute less than half of their household income, so many households survive because they have several wage earners.
“It would be a utopia to think that a family lives on 74 pesos a day], not even one person lives on 74 pesos,” Carlos Acevez del Olmo, secretary-general of the Mexican Workers Confederation, said at a news conference.
By Elliot Bullman for Mexico News Network
more recommended stories
K’u’uk: contemporary cuisine or pure alchemy?
Acknowledged at the Food and Travel.
Mérida, one of the best cities to live in Mexico (and the world)
Dan Prescher wrote an article for.
Hacienda Kancabchén: a call from a distant era just 15 miles away from Mérida
Hacienda Kancabchén maintains great part of.
Amazon launches new debit card in México
MEXICO CITY.- Banorte and Mastercard, together.
Over two thousand dogs and cats have been vaccinated in Valladolid
With the installation of seven locations.
Yucatecan pelicans and flamingos on the brink of becoming endangered species
“Pelicans and flamingos are some of.
Teacher Leaders Present an Innovative Blueprint for Relevant Learning in the Age of AI
What does the fourth industrial revolution.
New technology used in Yucatán to find people lost at sea
As part of a third aspect.
“Pet uh” Civil Association aims to promote Peto, Yucatán
PETO.- In the coming weeks the.
Mexico overtakes Brazil as the largest automobile producer in Latin America
Mexico registered a new record in.