Mexican Government Hikes Minimum Wage, Pushes Shorter Work Week

• Mexico on Wednesday announced it would boost the minimum wage next year and push to trim the country's long work week, the latest moves by the country's leftist administration aimed at helping workers. Starting in January, the minimum wage will rise 13% to 315.04 pesos ($17.27) per day, part of an agreement between labour, business and government leaders, Labour Minister Marath Bolanos said. The daily wage, however, will increase to about 440.87 pesos in parts of northern Mexico near the border with the United States, where wages are higher.
• The 2026 minimum wage increase will bring the accumulated rise in salaries to 154% since 2018, President Claudia Sheinbaum said during her morning press conference. Sheinbaum, who took office just over a year ago, has supported the wage hikes championed by her predecessor and mentor, Andres Manuel Lopez Obrador, and has argued they have helped reduce poverty significantly.
• Sheinbaum on Wednesday said the decision had been taken after consulting with the finance ministry and the central bank, as well as with the business community. She has pushed back against critics who argue that a new double-digit boost will harm consumers by pushing prices higher.
• Some analysts, as well as Central Bank Deputy Governor Jonathan Heath, have warned that bringing the minimum wage too close to the median salary could fuel inflation, even though annual headline inflation is currently within a percentage point of the bank's 3% target, after a series of interest-rate cuts since early 2024. The measure comes after Mexico's economy contracted 0.3% in the third quarter, as a slowdown in industrial activity drove the economy's first year-on-year quarterly decline since 2021.
• Mexico's economy has been weighed down by the impact of U.S. President Donald Trump’s on-again, off-again tariffs and uncertainty over the upcoming review of the United States-Mexico-Canada trade agreement (USMCA) next year. The government on Wednesday also said it was sending a bill to Congress to incrementally trim the working week from 48 hours a week to 40 hours per week by 2030. If passed, the official working week limit would be reduced by two hours a year starting in 2027.
• The 40-hour work week was a key promise during Sheinbaum's 2024 campaign but has been stalled amid pushback from business leaders. The average Mexican worker worked 2,193 hours in 2024, significantly more than workers in any other OECD country, according to OECD data.

(Sources: Reuters)