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At just $5 a day, Mexico has Latin America’s lowest minimum wage

At just $5 a day, Mexico has Latin America’s lowest minimum wage

Posted by Juan Gavasa on August 08, 2014

Mexico has Latin America’s second largest economy, is a major international trade power — and has the dubious honor of being the only country in the region with a minimum wage below the poverty line.

Despite significant economic growth over the last few decades, the minimum wage in Mexico has stagnated, falling to 34 percent below the poverty line, according to the United Nations Economic Commission for Latin America and the Caribbean (ECLAC, or CEPAL for its name in Spanish). The current daily minimum wage comes to just above US$5, equal to just 66 percent of the amount defined as the poverty threshold for Mexico.

“People [in Mexico] that earn twice the minimum wage have an income that is just barely above the poverty line,” said CEPAL director Alicia Bárcena, in remarks at an international forum on minimum wage, employment, inequality and economic growth in Mexico City. Due to inflation and rising prices for goods, Mexicans that earn the minimum wage have lost up to 70 percent of their real purchasing power since the 1980s, she said.

The daily minimum wage for Zone A in Mexico, which includes Mexico City and the states of Guadalajara and Monterrey, is 67.29 pesos (about US$5.08), or about US$140 per month. In comparison, the minimum salary in Bolivia, one of Latin America’s poorest countries, was recently raised to 1,488 bolivianos (about US$215) per month, while Costa Rica’s minimum wage is 3.18 times the income considered the poverty line.

In the last decade, every country in Latin America has raised its minimum wage — except for Mexico.

“Nearly 14 percent of Mexican workers earn less than the minimum wage, while just two out of every five workers receive as much as twice the minimum wage,” which is still just barely above the definition of poverty, said Bárcena.

According to CEPAL, data from strong regional economies like Argentina, Brazil, Chile and Uruguay has shown that higher minimum wages have led to greater equality in employment opportunities and a stronger system of formal employment.

Bárcena noted that a livable minimum wage policy is crucial to “improve the income of the less fortunate, promote equality and strengthen the domestic demand” that helps boost economic growth. Miguel Ángel Mancera, Mexico City’s mayor, said the country is “suffering a new wave of job insecurity,” making it more important than ever to discuss strengthening the minimum wage.

The discussion comes as Mexico struggles with stagnant growth that has been far less than expected. In 2013, Mexico’s economy grew by just 1.1 percent — much less than the 3.5 percent that the government had projected.

As many as half of the Mexico’s 118 million inhabitants live in poverty.

The issue of a livable income is exacerbated by the fact that many Mexicans work in the informal economy, selling flowers, washing car windshields or selling food and snacks from carts on street corners and in plazas. An estimated 30 million people, or 60 percent of Mexico’s total workforce, labor in the informal sector.

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