The labor analyst company Willis Towers Watson (WTW) highlighted that in Mexico the increase in minimum wage It could reduce the purchasing capacity of employees who have an income higher than this.
In its latest report “Wage Transformation and Purchasing Capacity of Salaries”, it is noted that from December 2018 to 2024, the minimum wage reflects a recovery in real purchasing capacity of 26 percent.
However, for personnel with income higher than the minimum wage, the behaviors have been unfavorable, since it was given as an example that the purchasing capacity in 2018 vs. that of 2024, for operational personnel with income higher than the minimum wage, decreased 19 percent.
While for professionals it also decreased 25 percent, for middle management levels 36 percent; and for managers 32 percent.
“Let us remember that purchasing capacity is closely related to individual and/or family consumption habits, as well as multiple other factors, which is why there may be appreciation gaps regarding the transformation of purchasing capacity during the last six years. . “Reality is perceived by each individual or family differently,” he said. Jorge Romero, associate director of Work & Rewards Mexico.
The minimum wage in Mexico
According to Inegi data, The minimum wage is the most paid in Mexicoperceived by 39 percent of employees. This large segment of personnel must have perceived a 26 percent improvement in their purchasing capacity, although this improvement is conditional on being perceived individually.
“We know that it is necessary to continue increasing the salary of staff at the most basic levels. However, this increase must be supported by greater productivity and GDP growth, supported by more trained personnel, who add more value to work, because if not, the only thing that will be achieved is to improve the distribution of ‘wealth’, but accompanied by inflation, which will end up affecting the other segments of the population,” added the manager.
The consulting company detailed that from 2018 to 2024, the general minimum wage grew from 102.69 pesos in 2018 to 248.93 in 2024; that is, a total of 142 percent during the period, at an average rate of 13.5 percent annually.
While salaries above the minimum wage, on average, grew 37.73 percent at an annual rate of 5.5 percent.
But during the same period, the inflation accumulated during the same six years corresponded to 39.4 percent, according to official figures, this is 5 percent annual average.
Therefore, Romero explained that, comparing wage growth with official inflationone could expect a recovery in the purchasing power of the equivalent salary for all workers, especially those who receive the general minimum wage, but in reality the effects of real inflation lead to the levels of improvement or loss discussed above.
K.L.
