Mexico minimum wage debate highlights deepening inequality


The news that Mexico is planning to increase its minimum wage may have attracted positive attention internationally, but in Mexico the debate is more nuanced.

When the Mayor of Mexico City, Miguel Mancera, submitted a proposal to the federal government to increase the minimum wage paid to more than US$6 starting on January 2015, it sparked a national discussion about the need to do the same all over Mexico.

Despite being one of the economic powerhouses of Latin America, Mexico has one of the lowest minimum wages in the region at 67 pesos, or around US$5 per day.

In comparison, the US is proposing to raise the minimum wage from US$7.25 to US$10.10 while in a referendum last May, Switzerland rejected the imposition of a US$25 per hour minimum wage.

In Mexico, some 6.5 million workers, or 14 per cent of the workforce, are said to earn at least one type of minimum wage (the Mexican system categorises 59 different types of work, each of which has specific salary levels).

But the planned increase has been criticised for failing to include earners who receive more than the minimum but not nearly enough to afford the cost of living.

They also say that the measure only serves to highlight the disparity between the luxurious lifestyles enjoyed by the country’s elite versus the 45 per cent of Mexicans living below the poverty line.

“We aren’t talking about a general increase in wages. This proposal is quite constrained and will not have a significant impact, as it applies only to workers who earn one minimum wage. The rest wouldn’t benefit from it,” Hector de la Cueva, a researcher at Center for Labour Research and Trade Union Advisory (CILAS) told Equal Times.

Today, 4.43 million Mexicans earn one minimum wage while 2.12 million earn between three to five minimum wages in order to meet their household requirements.

Government services and fines are indexed to the minimum wage; therefore, the first step will be to unlink them and create a new set of indicators.

Article 123 of the Mexican Constitution says that a worker’s salary should be enough for a household to meet its food and leisure requirements. But since 1976, Mexican salaries have depreciated 71 per cent.

More than 10 million workers –19 per cent of the Mexican workforce – cannot afford to buy all 40 of the staples comprised in the recommended household food basket, as their income is less than two minimum daily incomes required – or US$14 – according to the Centre for Multidisciplinary Analysis at the Autonomous National University of Mexico (UNAM).

“It is possible to make up for lost earnings with the wage increase, but this action has to be accompanied by other long-term policies related to, for example, food production,” David Lozano, professor of economics at UNAM, told Equal Times.

Mexico is one of the most unequal nations in Latin America.

Out of a total population of 118 million, some 52 million people live in poverty.

Meanwhile, Mexico is home to an ever-growing number of millionaires and 16 billionaires, not to mention the world’s richest man, Carlos Slim.

The 2014 “Billionaire Census” published by the consultancy firm Wealth-X and the Swiss bank UBS, estimates that the number of millionaires in Mexico jumped from 22 to 27 in the last year, with aggregate assets valued at US$169 billion – that’s US$32 billion more than the previous year.

De la Cueva suggests that the wage increase cannot be isolated from a broader debate about employment, particularly in the face of declining job opportunities and an informal sector that involves approximately 60 per cent of all Mexican workers in some form or another.

“There is more uncertainty with regards to benefits, social security, and stability. Wages keep declining and employment opportunities are more precarious, and yet the number of millionaires keeps increasing in a country that is polarized between a segment that captures the wealth and a large impoverished underclass. This contrast is brutal,” he asserted.

In Lozano’s point of view, employment ought to be treated as a component of economic policy, as “formal employment involves access to social security, for example, and depends on its sustainability on the long run”.