Mexico | Minimum Wage Reform: Progress or Setback?

Summary

The Senate of the Republic approved a resolution mandating that minimum wages be adjusted annually, at least in line with inflation, to prevent the loss of purchasing power and benefit low-income workers.

Key points

• Key points:
• Since 2018, the minimum wage has seen sustained double-digit increases without causing negative impacts on inflation, which has shown a notable slowdown in recent months.
• The minimum wage is 36.0% below its level in December 1977, highlighting a significant lag.
• From the 1990s until before 2017, the minimum wage was practically linked to inflation, adjusting at the same pace as prices. Although this measure preserved its purchasing power, it also contributed to its stagnation and slowed its recovery.
• There is a risk of returning to increases limited to inflation, which could once again stagnate the minimum wage.
• Addressing challenges such as high labor informality, low productivity, and delays in human capital development is crucial, as these are key factors driving economic and social progress.

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