Contractual negotiations “under pressure” due to the double-digit increase to the minimum wage

Note published on December 2 in El Economista, Empresas [Companies] Section by María del Pilar Martínez.
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60% of all collective bargaining agreement salary reviews –  unionized workers – will be conducted in the first trimester of 2023; thus, it is expected that they will be “under pressure” by the double-digit increase granted as the increase of general and professional minimum wages in the country, specialists in labor matters agreed.

Óscar de la Vega, partner at the De la Vega & Martínez Rojas Firm, explained that it is a “significant effort by the country’s employer sector to increase minimum wages by 20%, as it seeks to improve the conditions of its workers; nevertheless, great care should be taken in order not to have an impact on the severe inflation that the country is suffering, which will necessarily have an upward impact on collective bargaining agreement negotiation processes, further complicating the creation of formal employment for micro and small businesses, which are the main employers in the country.

In this same sense, specialist in labor matters Jaime Bustamante said that the main union organizations will present their proposals to the companies between January and March of next year. According to projections, single digit increases are expected; however, “the direct increase granted to minimum wages was set at 10%, plus a component denominated Independent Recovery Amount (MIR) the sole purpose of which is to help people with the lowest wages.”

Data from the Ministry of Labor and Social Welfare highlight that, as of September of 2022,  7,848 salary reviews had been conducted at the federal and the local levels.

Meanwhile, Germán de la Garza de Vecchi, head of Labor Services at Deloitte México, explained that since minimum wages are close to the contractual agreements, negotiations must be conducted staying very close to reality, “companies need to use strategies that allow them to know each sector and its behavior in the economy in order to reach agreements in regard to salary increases as it is important to recall that every negotiation must be submitted to a vote by the workers, as part of the changes brought by the 2019 labor reform.”

According to the Council of Representatives of the National Commission on Minimum Wages, as of the first of January of 2023, minimum wages will increase by 20%, going from 172.87 to 207.44 pesos per day, while minimum wages at the Northern Border Zone will increase from 260.34 to 312.41 per day, benefiting 6.4 million workers.