• INCREASE: Mexico will raise its daily minimum wage in 2020 by 20% -to the equivalent of USD 6.36- with the Mexican President Andrés Manuel López Obrador doubling down on a policy that began in 2019 -his first year in office- that saw a 16% increase in the minimum wage.
• HISTORIC: “It is a turning point in the history of minimum wages that ends the 73 percent drop in purchasing power recorded for more than 40 years”, said Luisa MarÍa Alcalde, Mexico’s Labor Minister, during an event attended by business and union lobbies that heralded the increase.
• PRUDENCE: Most analysts predict that given the increase, Mexico’s central bank will not drastically reduce interest rates. Back in November, the Central Bank of Mexico slashed the interest rate for the third meeting in a row by 25 points to 7.50, one of the highest in the world.
• WARNING: “Further adjustments in the minimum wage should be gradual to avoid short-term disruptions and adverse formal employment effects”, said the International Monetary Fund (IMF) in November while at the same acknowledging that increases in the minimum wage reduces inequality.
