New minimum wage in Mexico 2023: what is it enough for?

In Mexico there is a new increase in the minimum wage for 2023. After an agreement between the Government, the labor sector and the business sector, an increase of 20% was agreed that will benefit 6.4 million workers in the formal sector, according to the authorities.

In this way, the minimum wage goes from 260 Mexican pesos (US$13.42) to 312 Mexican pesos (US$16.10) in the free zone of the northern border and in the rest of the country it goes from 172 Mexican pesos ( US$9) to 207 Mexican pesos (US$10.68) per day.

Mexico will increase the minimum wage by 20% in 2023
Considering that the work month is 30 days, a person who earns the minimum wage in Mexico could receive up to 6,210 Mexican pesos (US$320.48) per month. People who work in border municipalities would receive up to 9,360 Mexican pesos (US$483.04). This represents an increase of 1,052 Mexican pesos (US$54.29) per month compared to 2022 (for the northern border the increase is 1,584 Mexican pesos, about US$81.74 per month), according to the Secretary of Labor , Luisa Maria Mayor.

But what is the new minimum wage for 2023 enough for?
The increase in the minimum wage will benefit 6.4 million formal workers, according to the Mayor, by increasing their purchasing power.

In the central states of the country such as Mexico City, Querétaro, Puebla or Guanajuato, the highest price of the basic food basket was around 1,015.50 Mexican pesos (US$52.40) in the week of December 19 to 23, 2022. And the lowest around 901.60 Mexican pesos (US$ 46.52).

While in the northern states of the country such as the bordering Tamaulipas, Baja California, Nuevo León or Chihuahua, the highest price of the basic basket was 1,041 Mexican pesos (US$53.72). And the lowest was around 938 Mexican pesos (US$48.40).

The basic basket consists of 24 products, including some fruits and vegetables, eggs, chicken, rice, beans, tortillas, toilet soap, toilet paper, among others.

With this new increase in the minimum wage for 2023, workers could buy more products: five kg of beans instead of three, almost one and a half kilograms more of eggs (from 3.2 to 4.6 kg) and 10 kg of tortillas instead of 6.5, that is, 3.5kg more, according to the Secretary of Labor.

Rise amid high levels of inflation in Mexico
The decision of the Mexican government to increase the minimum wage comes amid high levels of inflation in the country, which in October 2022 eased a little, reaching 8.4%, a lower figure compared to the percentage of 8.7%. registered in September of this year, the highest index since the year 2000, according to the National Institute of Statistics and Geography (INEGI).

Given the constant increase in food prices, the López Obrador government presented an anti-inflation plan at the beginning of October that aims to reduce the average maximum price of the basic basket by 8% and go from 1,129 Mexican pesos (US$ 58 .26) to 1,039 Mexican pesos (US$53.62).

The plan will be in force until February 2023, months in which companies agree not to raise the prices of their products in exchange for fewer bureaucratic charges for imports, according to the president of Mexico when presenting the plan.

Mexico, one of the countries furthest behind in terms of minimum wages
This is the fifth time that the Government of Mexico has increased the minimum wage since López Obrador came to power in 2018. However, the country is among the five countries with the lowest minimum wages in Latin American countries.

Below are the lowest minimum wages in Latin America at the exchange rate of January 4, 2023:

Venezuela: US$7.41 per month

Colombia: US$237 per month (2023)

Brazil: US$222.68 per month

Peru: US$268.68 per month

Mexico: US$320.48 per month (2023)

Argentina: US$389.17 per month (2023)

With information from Paulina Gómez and Mario González

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