Mexico’s Daily General Minimum Wage Slated to Increase Effective January 1, 2019

As a result of July’s presidential election, Andrés Manuel López Obrador became the new president of Mexico, winning by a wide margin over his competitors. He took office on December 1, 2018, for a six-year term extending from 2018-2024. New members of the Congress of the Union, which, for the most part, integrates members of López Obrador’s political party, MORENA, took office on August 29, 2018, and started working on September 01 of the same year.

As a result, President López Obrador has significant support in the legislature (Congress and Senate); therefore, all new laws and amendments proposed during López Obrador’s presidential campaign will almost certainly pass on a fast track mode.

With regard to labor and employment issues, President López Obrador’s speeches during his presidential election campaign focused on improving field workers’(for example, those who work on farms, crop fields, etc.), along the border (maquilas) and manufacturing workers’ standard of living, given that such workers are part of a vulnerable group that historically has not received attention and support. His campaign speeches also implied that his government will focus on providing a “dignified hire/job” to these workers pursuant to the Mexican Federal Labor Law and giving them access to fair wages, healthcare, and an improved standard of living.  (Observers are expecting an amendment to the Mexican Federal Labor Law, following up an amendment to the Constitution dated Feb. 28, 2017 and ILO Convention No. 98).

On September 20, 2018, members of the Senate unanimously ratified International Labour Organization (ILO) Convention No. 98, which grants the right to organize and to bargain collectively, rights that have been already adopted in the Mexican Constitution.

On November 30, 2018, the United States, Mexico, and Canada signed the United States–Mexico–Canada Agreement (USMCA). The USMCA will replace the North American Free Trade Agreement (NAFTA), which governs trade in North America. The USMCA must be ratified by legislative bodies within these governments before it can take effect. Chapter 23 on labor and Annex 23-A on collective bargaining represent the first time these topics were included in a major trade agreement.

Following President López Obrador’s campaign promises, the Mexican National Commission on Minimum Wages (Comisión Nacional de los Salarios Mínimos, or CONASAMI) issued a resolution decreeing an increase in the Daily General Minimum Wage (DGMW) for Mexico. Furthermore, CONASAMI established a different and higher minimum wage for the states and cities along Mexico’s northern border in order to promote work in such areas and avoid the draining of the labor pool, especially into the United States and Canada.

CONASAMI approved a 16.2% percent increase, effective January 2019, leaving a final DGMW of $102.68 MXP (which is approximately $5 USD per day). Moreover, CONASAMI established a special DGMW for states and cities along Mexico’s northern border; such special DGMW rises to $176.72 MXP.

The aforementioned increase is awaiting publication in the Official Gazette of the Federation (Diario Oficial de la Federación).

The 16.2 percent increase may serve as a general guideline for revising scaled wages in collective bargaining agreements applicable to Mexican companies as well as for benefits that are scaled to the minimum wage increase; however, employers may want to analyze each particular case on an independent basis.

The Mexico City office of Ogletree Deakins will continue to monitor and report on developments in the labor and employment laws of Mexico as they occur.