Increase in the minimum wage by 2022 will benefit more than 6 million people

The increase to minimum salary general (SMG) by 2022 will have a positive impact for more than 6 million people, according to the Ministry of Labor and Social Welfare (STPS). That means that the new increase will reach 1.5 million more workers than in 2021, when it reached 4.5 million.

The adjustment in this general referent implies a 22 percent nominal increase. However, the calculation used to build this growth cannot be used to set other salaries, such as contractual, federal, state, or municipal salaries, the agency warns.

Starting the following year, the general minimum wage (SMG) will go from 141.70 to 172.87 pesos per day in most of the Mexican territory (5,437 pesos per month). For the North Border Free Zone (ZLFN) the increase will be from 213.39 to 260.34 pesos per day (7,914 pesos per month). Six days after formally starting the negotiation, the Council of Representatives of the National Minimum Wage Commission (Conasami) unanimously approved the fourth double-digit annual increase, and the highest in 35 years, for this benchmark .

In December 2020, when the country was barely recovering from the first great wave of covid-19 infections and a second was anticipated, the agreement was by majority and an increase of 15 percent. On this occasion, for weeks the employer party expressed its willingness for a better increase, the representation of the workers took a negotiable proposal of 25% and the government also announced that it would continue with the policy of significant salary increase.

“It is the highest nominal increase since 1987, reaching the level of purchasing power that was had in 1985,” Conasami reported in a statement. Subtracting the percentage of inflation, which at the beginning of November reached 7%, the real increase will be 15 percent. To build the SMG amount, the Council of Representatives takes into account at least three factors: the current minimum wage, the Independent Recovery Amount (MIR) and the increase by fixing.

The MIR is a measure that began to be applied in 2017, after the de-indexation of the minimum wage of aspects such as fines a year earlier. This amount is absolute in pesos and is used so that, gradually, minimum wages recover their purchasing power, according to Conasami. But it is only for the SMG, it is not a reference for other salaries.

The increase by fixation is actually the increase by inflation. In March of this year, Congress amended the Federal Labor Law (LFT) to establish that increases in the minimum wage must always be above the annual increase in consumer prices, therefore, this percentage will always be variable.

This is how the fit to the SMG is formed

According to Andrés Peñaloza, who chaired Conasami between December 2018 and October 2020, to arrive at the final amount of the increase in minimum salary it is added to the current salary plus the MIR. From that amount, the percentage of the increase per fixation is calculated. The result of this operation is added to the original current salary figure plus MIR.

So, the current salary until December 31 of this year is 141.70 pesos and 213.39 pesos for the north of the country. By 2022, the Council of Representatives – comprising the government, companies and the labor sector – agreed that the MIR will be 25.45 pesos for the ZLFN and 16.90 pesos for the rest of the country.

Take the salary for most of the country as an example. The current amount is 141.70 pesos, plus 16.90 pesos from the MIR, that gives an amount of 158.60 pesos. Regarding that amount, they calculated 9%, an amount that results from adding two points to an estimated annual inflation of 7%, so that the salary increase is above this indicator.

9% of 158.60 pesos is equivalent to 14.27 pesos, which represents the increase due to fixation. This last figure is added to the salary plus the MIR and the result is the 172.87 pesos per day of the minimum wage approved for 2022.

“This increase is in addition to those granted in 2019, of 16.2%, in 2020, 20%, and in 2021, of 15%,” celebrated Conasami. From January to October, purchasing power of the minimum wage “achieved a recovery of 8.7%”, according to the Annual Report on the Behavior of the Economy in 2021. And the increase to the minimum wage on the northern border has recovered 118.4 percent.

“Although nominally it is attractive and breaks the inertia of a 15% increase, the truth is that what was lost is not recovered. It will hardly represent an increase of two times, when in 2020 we achieved an increase it was six times ”, says the economist Andrés Peñaloza.

The MIR: a young model, but already exhausted

The professional minimum wages, which corresponds to professions, trades and special jobs, “will also receive an increase of 22% as of January 1 of next year,” informed Conasami.

However, Peñaloza estimates that there are still pending issues, such as the creation of a free zone in southern border, as happens in the north and that President Andrés Manuel López Obrador promised to open some time ago. In addition, although until now the salary policy has remained in the increases, they continue to be below what the Constitution mandates, he points out.

The Magna Carta establishes that the minimum salary it must reach out to a hardworking person to support herself and her family. But the increases have been calculated so that the support of an average family of four is achieved with the income of two of them. “The government has two: either it modifies the Constitution or it sticks to what it says.”

On the other hand, the MIR, so young, is beginning to run out, he says. It was created as a device to ensure the recovery of purchasing power, but only of the minimum salary and not other remunerations, such as those that are negotiated collectively in the unions. Of course it has helped the SMG, but it has “generated a contention in salaries in the contractual sphere.”

To the extent that the negotiations of the contractual wages They do not start from the increase in the minimum wage, but from inflation, “they will continue to lag behind or slow down any attempt to improve these amounts that a good part of the working class in Mexico receives.” For the moment, he ponders, it is not possible to replace the MIR, but it would be necessary to think about another solution, since “only one fixation will hold two more”.

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