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24.7 million Mexicans who work at least one minimum wage job will get a 10.4% raise on December 1st. The annual wage raise usually takes effect in January.
On Tuesday, the Mexican government and business leaders agreed to raise the country’s minimum wage to 88.36 pesos from 80.04 pesos, though it falls far short of the 19 per cent hike, to 95.24 pesos, that business group Coparmex has been pushing for. Coparmex represents 36,000 businesses that account for almost a third of GDP.
For Mexican workers, the wage increase is welcomed as rising prices have reduced Mexicans’ purchasing power. For nearly two years, the Mexican peso has floated around its all-time low, roughly worth five U.S. cents. One U.S. dollar has been worth between 18 and 22 pesos since early 2016.
After several decades of raising the minimum wage roughly in line with inflation, the wage commission last year agreed to an increase of about 10%, well above the 3.4% inflation rate and a first step toward speeding up recovery of a wage that has long been insufficient to cover basic needs.
Inflation accelerated this year to 6.4% in October, largely because of the depreciation of the Mexican peso and January’s jump in gasoline prices, but it is widely expected to ease again in 2018.
Coparmex said the commission agreed to raise the wage again by April 30 at the latest to reach the 95.24 peso level which it considers the least amount required to meet basic needs.
For foreigners who wish to live in Mexico by obtaining certain types of visas, the minimum wage hike set a new bar for income requirements.
Here’s an example, for a retiree who intends to apply for temporary residency in Mexico, the law stipulates that they must show a monthly income from foreign sources (pensions, investments, social security, etc.) over the previous six months equal to at least 300 days’ worth of the minimum wage or have a savings balance equivalent to at least 5,000 days’ worth of minimum wage over the past 12 months. Prior to the minimum wage increase, this equated to 24,012 pesos (approximately US$1,265) and 400,200 pesos (approximately US$21,060) respectively. As of December 1st, the new thresholds will be 26,508 pesos (approximately US$1,395) and 441,800 pesos (approximately US$23,250) respectively.
For those intending to apply for permanent residency, one needs to show a monthly income over the previous six months of at least least 500 days’ worth of minimum wage or have savings equivalent to at least 20,000 days’ worth of minimum wage over the past 12 months. In this case, this equated to 40,020 pesos (approximately US$2,100) and 1,600,800 pesos (approximately US$84,250) respectively, prior to the minimum wage increase. As of December 1st, these new thresholds will be 44,180 pesos (approximately US$2,325) and 1,767,200 pesos (approximately US$93,000) respectively.
Other visas and economic solvency requirements may be affected. Consult with your local Mexican Consulate for details.