Sourcing in Mexico will be more costly in 2019.
The country’s wage commission said Monday that it will raise the minimum wage in Mexico by 16 percent to roughly $5 a day—and the hikes will continue in line with inflation, Reuters reported.
It’s a 71 cents per day increase and the largest percentage pay raise Mexico has seen since 1996. The new rate will be 102.68 pesos ($5.12) a day, which works out to roughly $122 a month based on a six-day work week. In regions closest to the United States, the daily rate will be 176.72 pesos ($8.81), Reuters reported citing Mexican employers’ confederation Coparmex.
Beyond improving worker welfare, the wage bump is also about boosting low income earners’ purchasing power.
“During many years the minimum wage has lost its purchasing power. Some say it has lost 70 percent of its purchasing power over the last 30 years,” Reuters reported Mexico’s new president Andres Manuel Lopez Obrador as saying. “We’re never going to have wage [increases] below inflation.”
Mexico’s wage rate had been a sticking point for President Trump and renegotiating the North American Free Trade Agreement (NAFTA) as the president felt too-low wages there posed unfair competition for the U.S. and helped fuel the migration Trump is trying so earnestly to halt. Elements of the new NAFTA, now called the United States Mexico Canada Agreement (USMCA), include provisions for shrinking the wage gap, which could mean sourcing costs in the country continue to rise.