Mexico's Minimum Wage Hike: A Financial Balancing Act

Mexico plans a 12% increase in its minimum wage for 2025, raising it to 279 pesos daily. However, due to an 18% depreciation in the peso's value against the US dollar over the past year, this represents a slight decrease in real-dollar terms. The northern border region will see a higher minimum wage.

In a move poised to impact millions of workers, Mexico announced on Wednesday a 12% increase in its daily minimum wage for 2025, taking it to 279 pesos, approximately USD 13.75. The decision was taken by a three-party minimum wage commission that includes government, labor, and business stakeholders.

Despite the raise, the value of the Mexican peso has slid by 18% over the past year, translating to a real-term decline in dollar value. Previously, in December 2023, the 249 pesos per day equaled USD 14.25, currency fluctuations now put the new wage at a lesser dollar equivalent.

Addressing regional disparities, Mexico's northern border, where living costs are steeper, will observe a higher wage threshold set at 420 pesos or USD 20.70 daily. Meanwhile, the domestic inflation rate hovering at 4.75% raises questions on whether the wage increase will substantially benefit workers.

(With inputs from agencies.)