Increase in minimum wage, welfare and the fight against poverty

The minimum wage in Mexico will rise 20 percent from January 1, one of the highest increases in decades. Despite this large increase, there are many doubts about how this increase will affect people and businesses.

The specialists, reading friend, have said that the most important thing about this generalized increase to a minimum is that it intends to remove millions of people from poverty who have not received support in many years.

According to Andrés Peñaloza Méndez, president of the National Minimum Wages Commission (Conasami), the body responsible for setting and updating general and professional minimum wages, the increase seeks to provide welfare for the worker.

“We went from a rise of 16 percent during 2019 to one of 20 percent in 2020, and the idea is that, as the economy regains dynamism, we will have to talk with the sectors, both employers and workers, to give more steps in the recovery of the purchasing power of the minimum wage, in order to move from the individual welfare line, which will be reached from January 1 with 123.22 pesos, to the family welfare line, ”he explains.

Currently the minimum wage is 102.68 pesos nationwide and 176.72 for the North Border Free Zone (ZLFN), but from 2020 with the increase will go to 123.22 pesos at a general level and 185.56 pesos for the ZLFN.

The truth, dear reader, is that the issue of wages is an unattended issue in Mexico, compared to the Latin American region. According to David Kaplan, IDB labor market specialist, “the Mexican labor market is an atypical case in the region. We did an analysis of 17 countries in Latin America and Mexico is the fourth richest country in terms of market, but it does not apply, because it has the lowest salary and high informality rates. ”

To get an idea of ​​what the specialist says, in our country 56 out of every 100 people with work do it in an informal job, they are not registered, nor do they have benefits, social insurance or contract.

This is for sure what he has done is to increase extreme poverty, according to the organization Acción Ciudadana Contra la Pobreza, between 2008 and 2018, the percentage of poor in Mexico has only dropped 2 points, going from a proportion of 44 42 percent of the population, so the reduction in poverty “is stagnant” and largely has to do with the labor market in which low wages are paid and temporary contracts are used for permanent jobs and security evasion social, so it is necessary to promote changes in these axes.

It is assumed that with the increase decreed, employees will be above the welfare lines established by the National Council for the Evaluation of Social Development Policy (Coneval), where according to them, the line of extreme poverty by income is located in thousand 117.79 pesos per month per person in rural areas and 576.06 in urban areas; just enough to cover the cost of the basic food basket, which does not include aspects of clothing, footwear, transport, health and many others that are also necessary.

According to the specialists, the increase will help those who earn up to two minimum wages, the rest of the workers must negotiate new wages. There will also be benefits in tax collection and for the IMSS, the economy in consumption will be activated and there will be no inflation resulting from this. Missing all informal, that 56 percent of workers, those will not see benefits.

According to López Obrador, the idea is to continue increasing the minimum wage every year, enough to achieve welfare for families and to reduce extreme poverty, an issue that remains to be seen. For now and that must be mentioned, nobody has opposed the measure of increase, neither entrepreneurs nor economists (much less workers), so that the strategy seems good, maybe too good … or what do you think?

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