Mexican President Andres Manuel Lopez Obrador announced another increase in the official minimum wage starting next year. Speaking at a press conference in Mexico City, the president said: it is a shame that wages in Mexico are lower than in China.
The President did not say how much he plans to raise the minimum wage, however, he recalled that in the first year of his presidency the minimum wage was increased by 20%, and in the second year — by 16%. At the same time, according to the Mexican government portal, in the period from 2000 to 2018, before the presidency of López Obrador, the average increase in the minimum wage was 4.1% per year and never exceeded 10.5%.
The Bank of Mexico has consistently opposed such a sharp increase in the minimum wage, believing that this “accelerates inflation.” The Bank has previously said that the new wage hike has the potential to encourage companies to raise the prices of their products due to rising labor costs and indirect increases in the prices of goods and services needed for daily consumption.
For many, the minimum wage — just an economic indicator that has nothing to do with the real level of wages. However, the decision to raise the minimum wage announced by the Mexican President will have immediate consequences for everyone who enters Mexico as a traveler or lives in the country as a resident.
We are talking about the so-called minimum wage in the Federal District (Salario Minimo General, SMG). This indicator is used when calculating all migration payments. In particular, as SMG size increases, the following will automatically increase:
- tourist tax upon entry into Mexico — usually included in the air ticket price, but paid upon entry through the land border,
- price for reissue of FMM migration card — payable when leaving Mexico with an expired FMM,
- ALL migration payments — registration and re-issuance of resident cards, permission to leave the country in the process of status settlement, procedure for acquiring confirmations, etc.,
- all fines for violation of the migration regime and deadlines for updating documents,
- financial requirements for applicants for the acquisition of Mexican visas and residency status based on economic viability when used at Mexican consulates abroad.
At the same time, the increase in the minimum wage in Mexico over the past two years has significantly outpaced the rate of devaluation of the Mexican peso. Consequently, for foreigners, the devaluation did not smooth out the increase in the costs of immigration procedures caused by the increase in the official minimum wage.