The negative effects of inflation in Mexico begin to multiply, so that in addition to the higher cost of loans and the lower value of the currency, there is the threat that wage increases will be reduced.
Irene Espinosa, deputy governor of the Bank of Mexico (Banxico), considered that wage increases may be affected in the following months if prices continue to be high, such as the one observed in the first half of August of 8.62% at an annual rate.
“I think that having high inflation for a long term, as we have had on the side of underlying (inflation), can affect this type of salary negotiations and generate pressure,” Espinosa said during the presentation of the institution’s quarterly report.
He was in favor of Banxico acting forcefully and bringing inflation towards the goal before salary negotiations are affected and considered that the most sustainable thing in the long term is that salary increases go hand in hand with productivity.
“The most desirable thing is that the market determines what wages would be and in the long term, what is important is that wage increases are related to increases in productivity,” he commented.
Data from the Bank of Mexico show that the cumulative increase in the minimum wage, from 2018 to 2022, is 195% for workers in the Free Zone on the northern border and 96% for those in the rest of the country.
As of last January, the general minimum wage went from 141.70 to 172.87 pesos per day; while in the Free Zone of the Northern Border it increased from 213.39 to 260.34 pesos per day.
20% increases to the minimum wage
Deputy Governor Jonathan Heath said that, taking into account the parameters set by the federal government to raise the minimum wage 1.7 times above the labor income line at the end of the six-year term, it should be increased 20% next year and another 20% the next.
“To get to that goal, I would think the government would have to raise the minimum wage by at least 20% by 2023 and possibly another 20% in 2024,” he said.
