Friday, August 29, 2014

Proposal for minimum wage increase finds impetus in Mexico's Federal District

But experts disagree on inflationary impact

Guadalajara -
Article 123 of Mexico's federal constitution provides that "The general minimum wage must be sufficient to satisfy the normal material, social, and cultural needs of the head of a family and to provide for the compulsory education of his children." But in a nation where the official minimum wage is a mere $5.00 dollars a day, and 36% of families must go into debt each year just to keep their children in school, the governor of the nation's capital says the constitutional obligation is not being met.

Governor Miguel Ángel Mancera proposed yesterday that the District's minimum daily wage of 67.29 pesos be raised immediately to 82.86 pesos ($6.37 USD), a 13% increase. The minimum would rise to 171 pesos (13.15 USD) by 2018, when the current presidential term ends.

Mancera, a member of the the left wing Democratic Revolution Party (PRD), plans to present his proposal to several federal agencies, including the Secretary of Labor, the Finance Ministry and the Bank of Mexico (Banixco), the nation's central bank. He'll also carry his case to the nation's congress and Mexico City's local legislative assembly, with the request that the District be permitted to set its own minimum wage independently of the federally mandated one.

Earlier this month Banixco director Agustín Carstens warned such a wage increase could trigger inflation. Banixco, the equivalent of the U.S. Federal Reserve, operates independently of the PRI administration of president Enrique Peña Nieto.

Other experts disagree. Gerardo Esquivel, an academic researcher at the College of Mexico policy institute, argues that prices in the Federal District would rise by less than 1%. "This first step up (to 82.86 pesos) would allow a worker and his family to live at a level which separates the poor from the most extremely poor," he said this week.

Mexico's National Statistical Institute (INEGI) claims 14% of the country's labor force must survive on the current national minimum wage, although others maintain the number is higher. INEGI contends the minimum wage has lost 71% of its purchasing power since 1976, placing severe stress on the typical family.

The Peña Nieto administration, grappling with a sputtering economy for the second consecutive year, has not taken a formal position on Mancera's proposal.

May 2, 2014 - Jalisco wage earners average $15 per day
July 14, 2013 - Over 60% of Jaliscans earn less than subsistence income

© MGR 2014. All rights reserved. This article may be cited or briefly quoted with proper attribution or a hyperlink, but not reproduced without permission.

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