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UNCLAS SECTION 01 OF 04 MEXICO 000013 
 
SIPDIS 
 
SIPDIS 
 
DEPT FOR DRL/AWH AND ILCSR, WHA/MEX, USDOL FOR ILAB 
 
E.O. 12958: N/A 
TAGS: ELAB ECON SOCI PINR PGOV MX
SUBJECT:  MEXICO ESTABLISHES DAILY MINIMUM WAGE FOR 2008 
 
REF: REF: 07 MEXICO 7042 
 
¶1.  SUMMARY: On Saturday December 22,  Mexico,s government 
announced the establishment of the country,s daily minimum 
wage for 2008. Mexico,s minimum wage is set annually by a 
Commission under the auspices of the GOM,s Labor Secretariat 
at the end of each calendar year.  This year the Commission 
proposed and the GOM agreed to a 4 percent wage increase. 
Mexico,s organized labor unions had wanted a 10 percent 
minimum wage increase which they stated was the least amount 
required to meet the basic needs of working families.  In 
addition to seeking a higher minimum wage, as was the case 
last year, the unions also sought (unsuccessfully) reforms in 
how the wage is set.  The process for establishing Mexico,s 
daily minimum wage has become an increasingly frustrating one 
for the country,s organized labor movement and a source of 
contention between it and the private sector.  Mexico,s 
unions see the minimum wage as a guarantee for ensuring a 
basic standard of living for workers.  However, Mexico,s 
private sector does not believe that anyone actually works 
for the minimum wage and therefore sees it more as a standard 
of reference.  As such the private sector, and to significant 
degree the GOM, use the process of establishing a minimum 
wage as a tool for combating inflation.  According to the 
unions and some National University (UNAM) researchers, the 
minimum wage process as currently established only serve to 
perpetuate widespread poverty and mass migration in Mexico. 
END SUMMARY. 
 
 
SETTING THE ANNUAL MINIMUM WAGE 
------------------------------- 
 
¶2.  Mexico,s minimum wage is set annually at the beginning 
of the calendar year following a series of intense 
negotiations among the three elements that make up the 
National Commission on Minimum Wages (CNSM); an entity under 
the auspices of the GOM,s Labor Secretariat.  The Commission 
is composed of representatives from the GOM, the private 
sector and organized labor unions.  In addition to setting 
the minimum wage, the CNSM is also supposed to ensure that 
the wage set is sufficient to meet a Mexican family,s basic 
needs.  In order to do this the Commission can periodically 
adjust the minimum salary throughout the year and it 
publishes a monthly bulletin to officially inform the public 
of the legal minimum wage. 
 
¶3.  In theory, and according to Mexican law, the country,s 
new annual minimum wage should take effect on the first day 
of a new calendar year.  Moreover, the minimum wage the CNSM 
ultimately announces should be based on a signed agreement 
between the three parties to the Commission.  In practice 
agreement on a minimum wage occasionally slips into mid 
January and there have been times when all parties within the 
CNSM failed to agree.  When that happens, the minimum wage 
decreed by the CNSM is considered a suggested wage floor that 
employers are expected but not legally obliged to follow. 
 
¶4.  Another facet of the minimum wage in Mexico is the fact 
that the country actually has three minimum wages (wage A, B 
and C), each determined by geographic regions.  The highest 
minimum wage is in urban areas designated as region A and the 
lowest are in rural areas or areas with low levels of 
industrialization designated as region C.  The previous 
presidential administration of former President Fox had 
promised that it would establish a single wage region for all 
of Mexico but failed to implement the legal and 
administrative changes that would have made this promise a 
reality.  Mexico,s organized labor movement had hoped that 
the current administration would establish a single minimum 
wage for the entire country and had lobbied for this goal in 
this year,s negotiations.  Unfortunately, from the union 
perspective, the other two parties to the CNSM were unwilling 
to establish a single national daily minimum wage for 2008. 
 
 
MINIMUN DIALY WAGE FOR 2008 INCREASED BY 4 PERCENT 
--------------------------------------------- ----- 
 
¶5.  Mexico,s organized labor sector went into the 
negotiation for the 2008 daily minimum wage publicly 
insisting on an increase or at least 10 percent.  Privately 
the labor sector hoped for a 6 percent increase and would 
 
MEXICO 00000013  002 OF 004 
 
 
probably have been happy getting five percent.  The 4 percent 
increase the CNSM announced for 2008 was essentially the 
increase of 3.9 percent announced for 2007 (Ref).  During the 
negotiations for the 2007 minimum wage the unions were 
unhappy with the increase the CNSM established but 
reluctantly agreed to accept it as a vote of confidence in 
the new administration of President Felipe Calderon which at 
that time had been in office less than a month.  For 2008 the 
unions accepted a wage which they considered &insufficient8 
and a &farce8 in order to avoid being portray as 
obstructionists and because they had no choice.  The GOM and 
private sector elements presented the labor sector with a 
take it or leave it situation and the unions felt compelled 
to accept. 
 
¶6.  The new daily minimum wage took effect on January 1, 
¶2008.  The new minimum wage by geographic region in Mexico is 
as follows:  In Region A which includes areas like Mexico 
City and selected parts of the states of Mexico, Baja 
California, Chihuahua and Guerrero the wage is ) 52.59 
(approx. USD 4.82); in Region B with areas like the cities of 
Monterrey, Guadalajara, Hermosillo and Tampico, the wage is 
) 50.96 (USD 4.67); while in Region C with cities like 
Aguascalientes, Puebla, Oaxaca, San Luis Potosi and Zacatecas 
the rate is ) 49.50 (USD 4.54). 
 
 
UNIONS SEE MINIMUM WAGE PROCESS AS EXTREMELY FLAWED 
--------------------------------------------- ------ 
 
¶7.  Although Mexico,s organized labor sector felt compelled 
to accept a minimum wage lower than it had hoped it did not 
feel compelled to accept this wage in silence.  From the 
perspective of Mexico,s labor sector the minimum wage should 
be adequate to meet a family,s basic needs.  The unions 
assert that meeting these needs is one of the main 
responsibilities of the CNSM and they have been very vocal in 
their criticism of the Commission,s failure to meet this 
responsibility.  Representatives of the Confederation of 
Mexican Workers (CTM), the Mexican Electrical Workers Union 
(SME) which is part of the confederation called the National 
Workers Union (UNT), and the Revolutionary Confederation of 
Workers and Campesinos (CROC), respectively the country,s 
three largest labor federations, pointedly remarked that the 
minimum wage was not a living wage.  Furthermore they 
questioned the utility of an entity (the CNSN) and a process 
(the minimum wage negotiations) that failed so completely in 
one of its main responsibilities. 
 
¶8.  The criticisms of these labor federations were picked up 
and expanded on by several nation newspapers.  These news 
outlets cited studies reporting that the approximately 365 
pesos a week earned by a worker in Region B (approx. USD 
33.49) would not be enough to cover the basic basket of items 
needed by a Mexican family.  These studies relied on a basic 
basket of goods established by Mexico,s central bank and the 
GOM,s equivalent of the US Consumer Protection Agency which 
contained ten categories of items such as edible oils, 
hygiene products, meat, poultry, fruits, vegetables, eggs, 
milk, etc.  Using this basic basket the studies concluded 
that in order to buy items from all ten categories a worker 
would have to earn a minimum of 600 pesos per week (approx. 
55.04). 
 
 
PRIVATE SECTOR SEES CNSM AS TOOL TO FIGHT INFLATION 
--------------------------------------------- ------ 
 
¶9.  Perhaps the main reason why the CNSM is viewed as such a 
failure by Mexico,s organized labor movement is that the 
Commission is seen so differently by the country,s private 
sector.  Mexico,s private sector representatives on the CNSM 
are convinced that no workers actually accept jobs paying 
only the minimum wage; therefore they see no reason to try 
and raise the minimum wage to a level that would cover the 
cost of a basic basket of goods.  What the private sector 
representatives do see, and they are not really wrong in this 
matter, is that over time the minimum wage has changed from a 
floor for maintaining a worker,s basic standard of living 
into a standard of reference that impacts all aspects of 
Mexico,s economy. 
 
¶10.  Mexico,s minimum wage was originally established to 
 
MEXICO 00000013  003 OF 004 
 
 
provide a basic standard of living and apparently it 
initially succeeded.  However, an unintended consequence of 
this success was that everyone knew exactly what the daily 
minimum wage was.  This widespread knowledge of the exact 
amount of the minimum wage soon lent itself to other 
unintended purposes.  First job offers, then private service 
fees and ultimately government fines, tax tables and a broad 
range of other financial indicators were increasingly 
determined by multiples of the daily minimum wage.  This 
practice has now become so prevalent throughout Mexican 
society that a clear link can arguably be drawn between 
increases in the daily minimum wage and the level of 
inflation in Mexico.  Consequently, the private sector 
members of the CNSM see their role as that of holding the 
line against inflation.  The GOM,s actions on the CNSM in 
consistently voting with the private sector in minimum wage 
negotiations and against the labor unions, demands for 
higher wages seem to imply that the government too sees the 
Commission as a tool for controlling inflation. 
 
 
CNSM BOTH FIGHTS INFLATION SETS REAL WAGES 
------------------------------------------ 
 
¶11. Because of the widespread use of the official minimum 
wage by both the private sector and all levels of government 
in Mexico as a standard of reference it would be hard (and 
probably futile) to argue that it does not have a very real 
impact on inflation.  What has not been very successfully 
argued for some time is the proposition that for many Mexican 
workers the minimum wage is their real wage.  The thinking of 
many in the private sector and apparently some levels of the 
Mexican government is that since no one could live on the 
minimum wage then clearly no one does live on the minimum 
wage. Consequently, they see nothing to be gained by trying 
to raise the wage to a level that would actually enable a 
worker to cover the costs of the basic basket of goods and a 
great deal to be lost in terms sparking inflation. 
 
¶12.  This perspective is now being challenge by an NGO named 
the Center for Labor Investigations and Union Consultants 
(CILAS) and researchers in the Faculty of Economic at the 
Autonomous National University of Mexico (UNAM).  According 
to CILAS, some 30 million Mexicans live on 30 pesos a day, 
another 20 million live on 12-22 pesos per day.  CILAS argues 
that many of these people are part of the working poor but 
that they earn so little that in order to survive their only 
options are to beg, engage in criminal activities or 
immigrate. 
 
¶13.  A study done by the UNAM researchers which focused 
mainly, but not exclusively, on workers in Mexico,s 
manufacturing sector vigorously contested the CNSM argument 
that few if any Mexicans actually work for the official 
minimum wage.  According to the researchers some 10.8 million 
Mexicans work for the daily minimum wage or less.  Mission 
Mexico,s Labor Counselor has personally met janitorial and 
retail store workers in Mexico City, and Maquiladora (foreign 
owned assembly plants) in the state of Puebla who work for 
only twice the daily minimum wage or less.  This figure, the 
researchers said, represented 23.9 percent of all working age 
Mexican.  Moreover, UNAM researchers added, another 9.56 
million workers make only 2 times the minimum wage which at 
best would be 105.18 pesos (approx. USD 9.64).  Together, the 
UNAM team asserted, these two groups represent 67 percent of 
all working age Mexicans. 
 
 
COMMENT 
------- 
 
¶14.  The process of establishing a minimum wage in Mexico is 
severely complicated by the fact the three elements who 
determine the wage see the process very differently and to a 
significant degree all three are right. The private sector 
and the GOM see the minimum wage process, correctly it would 
appear, as a tool for combating inflation.  Mexico,s 
organized labor sector views the process, also apparently 
correctly, as a way to maintain a basic minimum standard of 
living for workers. The results of these differing 
perspective on the goals of establishing an official minimum 
wage contributes to a process that is somewhat effective in 
fighting inflation but which leave much to be desired in 
 
MEXICO 00000013  004 OF 004 
 
 
terms of providing workers with a basic standard of living 
that discourage recourse to begging, crime or immigration. 
 
 
 
 
 
Visit Mexico City's Classified Web Site at 
http://www.state.sgov.gov/p/wha/mexicocity and the North American 
Partnership Blog at http://www.intelink.gov/communities/state/nap / 
BASSETT