The highest minimum wage increase in the last four decades

On December 1, 2021, the Board of Representatives of the National Minimum Wage Commission (“CONASAMI”) established the minimum wages that will apply in Mexico as of January 1, 2022, with an
increase of 22 percentage.

According to CONASAMI, this increase is the highest in the last 34 years and with this, purchasing power will be at its best level since 1985. Likewise, the head of the Ministry of Labor and Social Welfare (“STPS”), Luisa María Alcalde Luján, pointed out that Mexico is in 80th place internationally in the minimum wage comparison, but with this increase, the country will climb 13 positions to 67th place, placing it above economies such as Colombia, Peru, and Ukraine.

Minimum Wage

The International Labor Organization (“ILO”) defines the Minimum Wage as the minimum amount of remuneration that an employer is obliged to pay to its employees for the work, they have performed during a given period, which may not be lowered either by virtue of a collective bargaining agreement or by virtue of an individual agreement.

Minimum wages are considered to exist in more than 90 percent of ILO Member States. Their purpose is to protect workers against the payment of unduly low wages.

The 22 percent increase in Mexico seeks to raise wages above inflationary levels and surpass the Family Welfare Line defined by the National Council for the Evaluation of Social Development Policy (CONEVAL), and it is estimated that 6 million workers will benefit directly from this public policy. In this sense, the minimum wage increase will be as follows:

Percentage increase of 9.0 percent, plus 25.45 pesos for the Independent Recovery Amount (MIR), raising the minimum wage in the Northern Border Free Zone to $260.34 pesos.

In the rest of the Republic, a percentage adjustment of 9.0 percent plus 16.90 pesos for MIR, raising the general minimum wage to 172.87 pesos.

Northern Border Free Zone (“NBFZ”)

Why is the salary in the NBFZ higher than in the rest of the country?

Mexico shares 3,180 kilometers of border with the United States, the creation of the BNFZ seeks to avoid the migration of Mexicans to the United States due to the abandonment of comprehensive regional development in recent decades on the Mexican side of the border. For this reason, the inhabitants of the BNFZ enjoy tax benefits such as reduced VAT and income tax rates, as well as a higher minimum wage than the rest of the country.

The NBFZ covers 5 states and 45 municipalities corresponding to Ensenada, Rosarito Beach, Tijuana, Tecate, Mexicali, San Quintín and San Felipe, in the State of Baja California; San Luis Río Colorado, Puerto Peñasco, General Plutarco Elías Calles, Caborca, Altar, Sáric, Nogales, Santa Cruz, Cananea, Naco and Agua Prieta, in the State of Sonora; Janos, Ascensión, Juárez, Práxedis G. Guerrero, Guadalupe, Coyame del Sotol, Ojinaga, Manuel Benavides, in the State of Chihuahua; Ocampo, Acuña, Zaragoza, Jiménez, Piedras Negras, Nava, Guerrero, Hidalgo, in the State of Coahuila de Zaragoza; Anahuac in the State of Nuevo Leon, and Nuevo Laredo, Guerrero, Mier, Miguel Aleman, Camargo, Gustavo Diaz Ordaz, Reynosa, Rio Bravo, Valle Hermoso and Matamoros in the State of Tamaulipas.

List of Professions and Inspections

Currently, in Mexico, 61 occupations and professions are recognized, of which many work in the informal sector; domestic workers and day laborers were only added to the list in December 2020.

Finally, it should be noted that as of February 2022, CONASAMI will initiate inspections to different companies to corroborate those workers who are registered with the Mexican Social Security Institute (“IMSS”) with minimum wage are receiving this new figure of 172.87 pesos per day.

Consequences of the Increase in the Minimum Wage

There are many voices in favor or against these measures, since the salary increase in this proportion may result in uncontrolled inflation, but obviously, there is another position that seeks to protect the interests of workers, which points out that the benefit is greater than this possible consequence.

Therefore, we can only wait and see what the repercussions of this salary increase will be.