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Where Minimum Wages are Headed in 2020 and What it Means for Apparel Sourcing

The piece originally appeared in the Sourcing 2020 report. Click to read our in-depth examination of the outlook, opportunities and obstacles for the apparel and footwear market this year.

Though 2019 brought with it a slew of minimum wage hikes across key sourcing countries—Vietnam, Bangladesh, Cambodia, Mexico and Honduras included— rate increases will be fewer in 2020.

“Wages and other inputs aren’t going to change much,” according to William E. Connor II, CEO of The Connor Group.

Vietnam, the biggest beneficiary of the fallout fueled by the U.S.-China trade war, which has spurred companies to scale back their China sourcing, raised its minimum monthly wage by 5.3 percent in 2019, taking pay to between 2.92 million Vietnamese dong ($125) and 4.18 million dong ($180), depending on the region. For 2020, wages have hiked between 5.1 percent to 5.7 percent relative to the region, taking the highest monthly minimum wage to 4.42 million dong ($190).

Though a new wage is not yet in place, Bangladesh’s minimum wage board filed recommendations to raise the monthly pay rate for leather and footwear workers to 7,100 taka ($84), which would mark a 32 percent jump over the current salary. Part of the proposal also includes implementing a 5 percent yearly increase in basic pay.

Bangladesh hasn’t alluded to any intention to raise wages in its garment sector after a 51 percent jump for 2019.

One country where wages will be higher in 2020 is Mexico. The Mexican government agreed on Dec. 16 to raise the daily minimum wage by 20 percent, following a 16 percent hike that took effect in 2019. The increase, which took effect on Jan. 1, will take the daily rate for low-paid workers to 123.22 pesos, or $6.53 at current exchange rates. For 8-hour days and 40 hours per week, that would bring monthly pay to roughly $130.

In September, Cambodian government officials announced a 4.4 percent hike, which will bring minimum wages to roughly $190 a month as of January.

In the United States, the House of Representatives voted in July to approve a Federal Minimum Wage Bill that would send the hourly pay rate up from its current $7.25 to $15 by 2025. The Senate has added the measure way down on its Congressional Calendar, and few are expecting legislators to take up the bill.

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