Mexico’s minimum wage will increase 12% on Jan. 1 to 278.80 pesos (US $13.75) per day in most of the country, the federal government announced Wednesday.
The same increase will apply to the minimum wage in Mexico’s northern border free zone, lifting the daily rate there to 419.88 pesos (US $20.70).
Labor Minister Marath Bolaños López told President Claudia Sheinbaum’s morning press conference that Mexico’s business sector, unions and the federal government all agreed with increasing the minimum wage by 12%.
The minimum wage is set by the National Minimum Wage Commission, which includes representatives from business groups, unions and the government.
Sheinbaum noted that the monthly minimum wage will increase to 8,364 pesos (US $412) in most of the country and 12,596 pesos (US $620) in the northern border area.
She highlighted that the 12% increase is more than three times higher than the projected inflation rate in 2025.
Congress in October approved a constitutional reform bill that stipulates that annual increases to Mexico’s minimum wage must be higher than the prevailing inflation rate.
The most recent inflation data showed that the headline rate in Mexico was 4.56% in the first half of November.
Sheinbaum asserted that the 12% increase in the minimum wage won’t put upward pressure on consumer prices in Mexico next year.
She said in October that she would like to see the minimum wage increase by around 12% per year during her six-year term in government.
Minimum wage decreases in dollar terms due to deprecation of the peso
Mexico’s minimum wage increased 20% on Jan. 1, 2024, to 248.93 pesos.
When the daily rate for 2024 was announced just over a year ago, its dollar equivalent was about US $14.50, or $0.75 higher than the 2025 rate based on the current exchange rate.
The US dollar bought about 17 pesos at the start of 2024 whereas it currently buys around 20.3 pesos. The peso has depreciated significantly since Mexico’s elections were held in early June.
The 29.87-peso increase to the daily minimum wage that will take effect on the first day of 2025 is equivalent to just US $1.47. The 44.99-peso increase in the northern border zone represents a raise of US $2.21 per day.
En la conferencia matutina se anunció el incremento de salario mínimo de 12% para 2025.
Es el menor incremento desde el sexenio de Peña Nieto.No se espera que genere presiones inflacionarias adicionales.
— Gabriela Siller Pagaza (@GabySillerP) December 4, 2024
Gabriela Siller, director of economic analysis at Banco Base, noted on X that the increase in percentage terms is the lowest since the six-year term of former president Enrique Peña Nieto (2012-18).
The increase is not expected to generate additional inflationary pressure, she added.
Minimum wage on Jan. 1 will be more than triple the rate when AMLO took office
When former president Andrés Manuel López Obrador took office in December 2018, Mexico’s daily minimum wage was just 88.36 pesos. The new rate that will take effect on Jan. 1, 2025, will be 215.5% higher.
Bolaños said on Wednesday that the purchasing power of the minimum wage will be 135% higher than it was in 2018. That figure takes into account price increases due to inflation over the past six years.
Between 2020 and 2023, Mexico’s minimum wage increased more in real terms than that of any other member country of the Organization for Economic Cooperation and Development, or OECD.
The increase in the minimum wage during López Obrador’s presidency helped lift millions of Mexicans out of poverty. The government’s welfare programs have also contributed to lower poverty rates.
Bolaños said that the federal government has a “vision of shared prosperity” and a “fair Mexico for everyone.”
Sheinbaum took the opportunity to criticize previous federal governments for failing to increase Mexico’s minimum wage by any significant amount.
“As you know, during the entire neoliberal period [1982-2018], what they bragged about abroad was cheap labor in Mexico,” she said.
“This speaks of the dehumanization of those governments. You can’t go abroad to brag about starvation wages,” Sheinbaum said.
With reports from Reforma, El Economista and El Financiero
