Inflation once again ate the salary adjustments to add a fall for the second consecutive month and for the sixth time so far this year. In October the salary reviews in the federal jurisdiction they granted an increase of 4.1%, on average, maintaining the level observed in September. However, the rise in consumer prices registered in the same month caused a decrease of -2.05 points in real terms.
In October, inflation stood at 6.24%, its highest level since the end of 2017 and double the estimate of the Bank of Mexico (Banxico). As a result, wage adjustments were again at their lowest level in four years.
The 508 salary reviews that were carried out in the tenth month of the year covered 629,106 workers, the highest number of people involved in the contractual adjustments so far in 2021. With this new fall, this year’s increases have a deficit of -0.94 per hundred.
Ricardo Aguilar Abe, chief economist at Invex, pointed out that the inflation above 6% It is a transitory phenomenon, although during the end of the year it is likely to remain at those levels and return to averages close to 4% until the middle of 2022.
“It will be important to see how Banxico sees the behavior of inflation for the following year, because we do expect a slowdown to take place. But if it remains very high or around current levels and Banxico sees that we will probably not fall below 5% for next year, there could be pressure in the following negotiations, ”Ricardo Aguilar explained in an interview.
According to Salary Budget Planning Report of the consulting firm Willis Towers Watson on Salary adjustment Average that companies are considering granting in Mexico for 2022 is 4.2%, an increase that is even below the optimistic estimate of the organizations themselves on an inflation level of 4.5% for the end of 2021.
“Inflation has several undesirable effects on the economy. One of the most worrying is the erosion of the purchasing power of households. This means that people are going to experience a reduction in their well-being, since the increase in prices reduces the quantity and variety of goods they can access ”, stated Alejandro Saldaña, Chief Economist of Banco Ve por Más.
But the high inflation observed in recent months, added Alejandro Saldaña, could not only affect the purchasing power of workers, it could also toughen the access to financing due to the risk that interest rates will increase.
From Ricardo Aguilar’s perspective, the margin that the labor market has for its recovery is one of the factors that affects companies not granting higher increases. “We do not see that there is a full recovery and that may give some margin for the salary negotiations they are not so high because there are still people willing to take less paid jobs ”.
The last two salary revisions, those of September and October, represent the second lowest figure granted as an increase so far in the pandemic, only surpassed by the 3.8% increase observed in January of this year, to which low inflation From that moment it allowed that in real terms it implied an increase of 0.22 percent.
Reference-www.eleconomista.com.mx