Leaders worry inflation, underemployment will nullify Mexico’s minimum wage hike

Border Report

Workers on Mexican side of border now earning $1.62 an hour

EL PASO, Texas (Border Report) – Mexico this week hiked the minimum wage in cities bordering the United States to 260.34 pesos per day, which comes out to US$1.62 an hour, up from the previous $1.33. By contrast, the minimum wage went up to $11.50 an hour in New Mexico and remains at $7.25 in Texas.

Some local business leaders say the increase should benefit the economies of Juarez, Mexico, and El Paso, where thousands of Mexican residents every week come over to shop. But they worry rising inflation will render the wage increase null.

“Inflation is rising to levels not seen in the last 30 years. Consumer goods are more expensive because of low supply and high demand. The (COVID-19) pandemic, which continues to this day, is affecting production and delivery,” said Thor Salayandia, president of the Juarez Chamber of Industry and Manufacturing.

He said many small and medium-sized businesses are at risk of closing unless they get direct stimulus payments from the government. Plus, maquiladora employment has been trending down recently due to the worldwide chip shortage that’s hitting automakers hard.

“We see a complicated start to 2022 from an economic standpoint,” Salayandia said.

Maquiladoras – manufacturing plants in Mexico operated by U.S. and other foreign companies – typically pay their workers more than the minimum wage but use it as a benchmark to calculate how much more they’re going to offer. Salayandia said maquiladoras in Juarez last October paid an average of 8,870 pesos per month ($443) to production workers and techs.

That was less than the 11,475 pesos per month ($573) service-industry professionals were making and the 12,322 ($616) office personnel in Juarez made. However, the latter jobs aren’t plentiful.

“Sixty-two percent of our formal employment is in the maquila industry. We need a strategy beyond the maquilas, we need to diversify our economy, especially among younger people who increasingly don’t want to work at the maquilas,” Salayandia said. “Only through the growth of small and medium-sized businesses can we abate poverty.”

By that, he means the underemployment that prevails in Mexican border cities and large population centers in the interior of the country. That includes anyone from street vendors in Downtown to shop attendants in low-income neighborhoods who may only get a few hours’ work every day.

According to the last Mexican census, 571,000 out of Juarez’s 1.5 million inhabitants live in poverty.

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