Prior to October 1st, 2016, there was no national minimum wage standard set for Mexico across the entire country.
In the past, the minimum wages in Mexico were based on two distinct regions, known as zones. One zone was primarily urban settings, and therefore centers of commerce and business, while the other zone incorporated rural areas. On April 1st the government decided to review the wage laws and it was determined that a national minimum wage be established across the country.
Let’s take a look at the details.
It isn’t that Mexico didn’t have a minimum wage prior to this change, but by splitting wage restrictions between the zones, people doing the same job in two different sectors could conceivably earn vastly different amounts. With this change, the minimum wage country wide is the equivalent of $4.24, based on current exchange rates.
Big Raise for Zone B
This won’t impact many people within Zone A as the current minimum wage was what was previously enforced, but it does affect workers within Zone B. While they historically made significantly less than their Zone A counterparts, now they will receive a 2.66% raise which will make the playing field even for all Mexican workers.
Increase in Production and Commerce
Studies have shown that across further developed countries, the establishment of a minimum wage has helped increase overall productivity, and in return, commerce. It also has an impact on the quality of life for citizens of these nations. Those living in Zone B will be able to see these effects first hand.
Negative Effects of Minimum Wage
While the overall effects are positive, it would be irresponsible not to acknowledge the possibilities of some negative repercussions. Some people believe that it is because of minimum wage requirements that some companies find it necessary to lay off employees or that other business choose to outsource or even offshore their production. The impact of this on Mexico’s economy will need to be evaluated over time.
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