FNS: Mexican workers pay lags in the 21st century

Frontera NorteSur

A new study reconfirms what many people know from first-hand experience: Mexican workers’ purchasing power has plummeted since the turn of the century.

In a just-released report, the economics department of the National Autonomous University of Mexico (UNAM) documented the number of hours the lowest-paid workers need to labor in order purchase a basic basket of goods made up of  rice, cooking oil, beans, milk, sugar, coffee, and other routinely consumed products.

According to the analysis, Mexican workers earning the daily minimum wage had to toil 11.38 hours in December 2011 to buy a basic basket of commodities, compared with the 9.55 hours of work necessary to buy the same group of products in December 2001.

The UNAM study also compared Mexican workers’ purchasing power with their counterparts in five other Latin American nations. While Costa Rican and Peruvian workers also witnessed a drop in their purchasing power between 2001 and 2011, low-income workers in Guatemala, Uruguay and Brazil actually experienced significant jumps in the buying value of their wages during the same decade.

In view of the deterioration in the purchasing power of Mexican wages vis a vis those in the other Latin American countries examined, David Lozano, UNAM economist, called the study’s findings “alarming.” Of the six nations studied by UNAM researchers, Mexico ranked Numero Uno in the devaluation of the purchasing power of minimum wage workers. The study reported that the daily minimum wage in Mexico lost 24.42 percent of its consumer punch in the ten year period analyzed.

While only 9.2 percent of Mexican workers earn the daily minimum salary of about five bucks, the UNAM report gives a general idea of the pressures facing much bigger slices of the working class. A large group of workers, or 26.3 percent, earns between one and two minimum salaries daily, while another nearly-as-large segment, or 26.1 percent, makes between two and three minimum salaries every day. In sum, more than 60 percent of Mexican workers struggle to get by on wages that hover between $5 and $15 each day.

In 2012, a new round of price hikes bodes further ills for workers’ purchasing power.

In the southern state of Guerrero, for instance,  the cost of a kilo of the staple corn tortilla has now reached 16 pesos- well above a dollar- in the small neighborhood outlets Mexicans are accustomed to shopping. By the end of last year, tortilla prices reportedly hit 18 pesos a kilo in some places in the northern border state of Chihuahua.

In Guerrero tortillas can be purchased for significantly lower prices at large commercial supermarket chains like Walmart’s Bodega Aurrera (7.90 pesos) or Comercial Mexicana (9.90 pesos), which process huge amounts of corn flour and operate on economies of scale the mom-and-pop stores are unable to match.

Yet even the going prices at the big box stores are well above the average tortilla price of about six pesos in 2006, the year when the outgoing Calderon administration assumed office.

In a broad economic context, the Mexican economy during 2001-2011 was characterized by the signing of numerous free trade agreements, macro-economic stability, infusions and contractions of foreign capital investments, two recessions linked to international economic crises spawned in the United States, spikes  and plunges in migrant remittances, and declines in international tourism.

Other trends included the weakening of unions, the increased outsourcing of workers and booms in the illicit economy. Especially during the last five years, millions of young Mexicans came of working age at a time when the historic safety valve of migration to the United States was largely slammed shut.

Sources: El Sur/Agencia Reforma, February 6, 2012. La Jornada, December 19, 2011. Article by Susana Gonzalez G.

Frontera NorteSur: on-line, U.S.-Mexico border news
Center for Latin American and Border Studies
New Mexico State University
Las Cruces, New Mexico

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