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Is it sustainable to have increases to the minimum wage of 11%?

Is it sustainable to have increases to the minimum wage of 11%?

Regarding productivity, “it has increased quite a bit in Mexico. Here are the best maquiladoras,” Franco added, referring to industries such as automotive, auto parts, white goods and appliances.

However, for micro, small and medium-sized companies (MSMEs) it would represent a risk, warned Barbosa, from Coparmex.

“We have to study the peculiarities of each industry, each company and each source of work. 80% of the country's employers are MSMEs, and there will be companies that will be able to give increases of one or two points above (inflation). Put it into law now, put undue pressure on formality, on job creation and on the economy,” he said.

Currently, the Federal Labor Law (LFT) establishes that the minimum wage cannot increase less than inflation. Something that President Andrés Manuel López Obrador presented as a reform initiative constitutional.

According to Iván Franco, salary increases would have to be two percentage points above inflation, while Barbosa points out that not all SMEs would support such an adjustment.

“As a reference, in March the collective contracts of the unions that remained active, precisely from the reform, the increases on average are 6.75% or 7%. This year, the minimum increased 6%, plus the independent recovery amount that they give us 20%, inflation was 4.76%,” Barbosa stressed.

Inflation and monetary policy matter too

So that increases in the minimum wage can occur without affecting companies, it is necessary that productivity also increases. Without this factor, the increases will not work, warned Eréndira Yaretni Mendoza Meza, specialist in economic matters, development and internationalization.

He added that factors such as inflation, monetary policy (reference interest rate) and a controlled depreciation of the peso must also be considered.

Mendoza Meza, a professor at the Autonomous University of the State of Hidalgo, maintained that a controlled and acceptable level of inflation, which does not discourage consumption or investment, should be 9%, while a reference interest rate of 5% should also be I would maintain interest in investing in Mexico and in credit.

A controlled depreciation of the peso – with the currency losing cents against the dollar -, Mendoza added, will serve to attract foreign investment.

If the above is achieved, there will be a virtuous circle that will favor investments, there will be money to increase salaries, as well as resources to maintain purchasing power.

Expansion sought the Business Coordinating Council (CCE) to have its point of view on the increases in the minimum wage, but did not receive a response at the time of going to press.



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Written by Editor TLN

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