Mexico's new government is increasing minimum wages across the country by 16 percent and doubling the minimum wage in a narrow stretch of territory along the border with the United States, President Andres Manuel Lopez Obrador said Tuesday.
Lopez Obrador, who took office on Dec. 1, said the minimum wage had lost 70 percent of its purchasing power over the last three decades following devaluations and economic crises. He noted that three decades ago, a day's wage could buy 50 kilograms of tortillas, and today, it buys only 6 kilograms.
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The minimum is currently equivalent to $4.40 per day, and will rise to $5.10 in January. At that level, it remains among the lower minimum wages in Latin America.
But in the townships on the northern border, the wage will rise to $8.80 per day. The cost of living on the border is generally higher than in southern and central Mexico.
Lopez Obrador said employers will be able to pay the higher wages because the value-added tax will be cut in half in the border zone. The value-added tax will remain at 16 percent in the rest of the country.
Lopez Obrador said the border development and wage initiatives can serve as a buffer against emigration, to convince Mexicans they can stay in their home country and make a decent living.