25 | JUN | 2019
Only 0.5% of people in Mexico earn more than USD$16 an hour
“It is well known that less than 1% of the employed population in Mexico makes more than 10 minimum wages, which equals around 27,000 pesos a month," stated IDIC director - Photo: File photo/EL UNIVERSAL

Only 0.5% of people in Mexico earn more than USD$16 an hour

31/08/2018
13:47
Newsroom
Mexico City
Ivette Saldaña & Rubén Migueles
-A +A
Peña Nieto's administration has agreed to U.S. conditions on NAFTA, which could lead to a crisis in the automotive industry

Very few people in Mexico make more than 16 dollars an hour, as would be the case if salary conditions set by the United States government through the new bilateral free trade agreement with Mexico were met in the automotive industry.

Only 269,000 workers in the country are paid 16 dollars an hour or more, which is equivalent to 308 pesos (with a MXN$19.30 exchange rate), meaning 2,470 pesos a day or 74,112 a month.

The number of employees that receive said amount barely represents a 0.5% of all the 53.8 million persons in employment, according to the National Institute of Statistics and Geography (INEGI).

“It is well known that less than 1% of the employed population in Mexico makes more than 10 minimum wages, which equals around 27,000 pesos a month. A salary of over 74,000 is unattainable to most,” stated the director of the Institute for Industrial Development and Economic Growth (IDIC).

Last Monday, as part of the bilateral trade agreement between Mexico and the United States, it was revealed that, in order to consider that a vehicle was made in North America and for the company producing it to avoid paying tariffs, they had to incorporate at least 75% of goods from both countries. Furthermore, between 40% and 45% of these goods must come from regions where laborers make at least 16 dollars an hour.

Arturo Rangel, Vice-President of foreign trade and international relations of the National Chamber of the Industry (CANACINTRA), stated that said wages in Mexico’s automotive sector were only paid to managers, directors, and deeply specialized technicians such as die and plastic makers, who can usually aspire to higher wages than an engineer in mechatronics.

In Mexico, wages for specialized technicians in the automotive sector and mechatronics engineers range between 5 and 7 dollars an hour, which is bellow the 16 dollars established by the bilateral agreement.

In order to meet said wage, automakers would have to invest in large facilities meant to automate processes so that technicians and specialists handle between three and four production lines, stated Rangel.

De la Cruz explained that the new trade rules would require the country to meet certain industrial criteria allowing them to increase productivity, reduce costs of inputs such as electricity, and improve safety and logistics conditions for companies in that sector to implement said wages in Mexico.

“President Donald Trump and American labor unions are seeking to bring manufacture back to their country, preventing Mexico from holding a labor advantage over the United States, since low wages in the country have caused automotive industries to turn to Mexico for manufacture.

“The fact is that we can’t change these wages to 16 dollars an hour overnight, because it breaks the wage scheme of the automotive industry,” commented Ricardo Martínez, employment attorney and partner of the De la Vega Martínez Rojas Law Firm.

He added that the wage increase was essentially a good idea, but it required a gradual process that wouldn’t discourage assemblers from investing in Mexico or generate unemployment in a sector that is currently booming.
 

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