Living, Money

Mexico’s Minimum Wage in 2018

Mexican Money

Mexico’s minimum wage was raised on Dec 1, 2017—a month earlier than usual—to $88.36 pesos per day; a 10% rise on the 2017 level of $80.04 pesos a day introduced on January 1st 2017, and the second year in a row it has made above-inflation increases to the minimum salary. In 2016, Mexico’s minimum wage was $73.04 pesos a day.

In years past the minimum wage had been raised more-or-less in line with inflation, to avoid a wave of wage demands that could cause a spiral of increases in prices and wages which would eventually have the most impact on the poorest people. The problem was that the minimum wage has for years been so low that it isn’t enough to for a single person to live on, never mind a whole family.

Figures published in an employment survey by INEGI, the country’s National Statistics Institute, report that around eight million workers earned the minimum wage out of ~52 million people who were employed. But the raw data don’t tell the whole story. People earning minimum wage would be eligible for in-work benefits provided by their employers, and benefits under several government anti-poverty programs—and some may also have other sources of income besides the one salary.

The decision to start raising the minimum wage more than other wages in a bid to even-up earnings took several years to implement. First it was necessary to uncouple thousands of official prices—including things like speeding fines and home loans—which for years were determined in multiples of the minimum wage.  For example, a big increase in the minimum wage level would have made hundreds of thousands of mortgages from the government-run agency Infonavit unaffordable. The process of creating a new unit of value to replace the minimum wage for those prices took more than a year. There was also a need to take into consideration studies on the possible effects that the change would have on wages and employment.

Many workers may take formal employment paying the minimum wage for the benefits such as medical insurance and sick pay that comes with Mexico’s social security institute IMSS, as well as Christmas bonuses and other perks, which those working in informal employment don’t have access to, even if they make more than minimum wage.

Anyone who hires a maid daily in Mexico, or a gardener, or pays someone to wash their car, knows that none of these self-employed people provide such services for 88 pesos a day. Rates vary depending on the region and location although people should expect to pay $350-450 pesos for a maid to clean for a day. Low wages in other service sectors such as restaurants, hospitality, and gas stations underscore the importance of tipping in Mexico.

Our guide to the Cost of Living in Mexico is a comprehensive source of information about prices in Mexico that can help you to form a detailed budget based on your individual plans and circumstances.

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