Minimum Wage vs UMA Update – September 2020
Immigration offices in Mexico have begun to transition to the new ‘UMA’ multiples that replace the Minimum Salary multiples.
Read this article to learn more about UMA and the transition period, and how it affects qualification for those seeking residency in Mexico on the basis of economic solvency.
Historically, Mexico has based public fees and other charges (like fines) on multiples of the country’s National Minimum Salary, expressed as an amount in pesos per day. The minimum salary rises every year and, until recently, would rise only modestly—usually in step with the official rate of inflation.
In 2016, the Peña Nieto administration moved to decouple the minimum wage from a whole range of fees, fines and other official calculations, and introduced a ‘transitional’ measure, known as Unidad de Medida y Actualización (UMA) — which would enable minimum salaries to be increased significantly without the corresponding and potentially punitive rises in public charges and fees. Once this directive was in place Mexico’s minimum daily wage began to increase significantly:
- in 2016 the minimum wage as $73.04 pesos a day;
- in 2017, the minimum wage rose about 9% to $80.04 pesos a day;
- in 2018 it rose just over 10% to $88.36 pesos a day;
- in 2019 it rose a further 16% to $102.68 pesos a day
- a rise of 20% took effect from January 1, 2020, making the current rate $123.22 pesos a day
Over the last 4 years, Mexico’s minimum daily wage has risen from ~$73 pesos a day, to ~$123 pesos a day—an increase of 68% over that time.
Under the Immigration Law of 2012, financial criteria for qualification of residency permits in Mexico is tied multiples of the minimum salary. These were supposed to be superseded by this directive which introduced the UMA, but in practice, the immigration law itself has not been amended to cite UMA, and our associates tell us that Mexican Consulates abroad and immigration offices in Mexico continue to use the minimum salary as a reference for their calculations and not the transitional amounts quoted in this official UMA table.
The implications for foreign residents (particularly retirees) applying for residency in Mexico can be significant. Here’s an example of why:
Minimum Wage Multiple: If you apply for Temporary Residency in Mexico and the authority uses the 2020 Minimum Wage as the multiplier in the calculation ($123.22 pesos), you will need to demonstrate a monthly income of $36,966 Mexican pesos (about USD $1,945*) over the last six months, or a savings balance of $616,100 Mexican pesos (about USD $32,426*) over the last 12 months.
UMA Multiple: If you apply for Temporary Residency in Mexico and the authority uses the 2020 UMA as the multiplier in the calculation ($86.88 pesos), you will need to demonstrate a monthly income of $26,064 Mexican pesos (about USD $1,371*) over the last six months, or a savings balance of $434,400 Mexican pesos (about USD$22,863*) over the last 12 months.
The average Social Security check for a retired worker in the US is about USD $1,478 per month (November 2019).
If Mexican Consulates continue to use the Minimum Salary as the basis for their qualification criteria, then it will become harder for retirees using their Social Security checks to qualify for residency in Mexico—especially as further above-inflation rises to the minimum wage are expected in the coming years. Absent any change to the policy, fewer Americans will quality financially for a retirement permit in Mexico, as the average Social Security payments are now around US$1,470 — comfortably above the amount required when measured under UMA, but nearly a quarter less than the ~US$1,945* requirement based on a multiple of the 2020 Minimum Salary.
Learn more about Financial Criteria for Residency in Mexico.
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* Re US dollar amounts quoted: The USD amounts calculated above assume 19 Mexican pesos to 1 US dollar. In practice, each Mexican Consulate abroad uses slightly different exchange rates so their calculations may be higher or lower than this equivalent. Contact your nearest Mexican Consulate for more details.
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