Resumen

In Mexico, the minimum wage level has been so low as to become a national and international controversy. In December 2018, Andrés Manuel López Obrador (AMLO), a left-wing populist, took over presidency. During his campaigns he promised Mexico to increase the minimum wage, and even double it by 2024, with the goal to recover Mexicans´ purchasing power and reduce poverty and inequality (Hernández Orozco, 2018). He has until now followed through with his promise and increased the minimum wage every year at higher rates than previous administrations (Hernández Orozco, 2018). The topic of a legal minimum wage has been strongly debated between its proponents and opponents, as to whether it causes a positive or negative effect in the economy and quality of life of citizens. This has also been the case within Mexico, which raises the question whether AMLO´s minimum wage proposal will indeed increase the quality of life of Mexican households. This thesis aims to answer this question through research done under a Systematic Review methodology, in order to limit bias and increase the reliability of the study. A literature review is followed, based on secondary sources obtained through the Snow-Ball method. It is found in the literature review, that although there are plenty of arguments in favor and against of a minimum wage, the recent global trend has been to establish a minimum wage or to continue to increase its level (Belser, Xu, 2018). Mexico has also increased its minimum wage level continuously since its first establishment, but the increases have been rather low, and its purchasing power has decreased (Ojeda, Peralta, Hernández, 2008). This has been mainly due to the fact that limitation of the minimum wage became an instrument to maintain inflation levels low, and thus the economy stabilized, in order to combat previous public policy management failures (Ojeda, Peralta, Hernández, 2008). Since it was also linked to fines, pensions and other instruments not related to wages, it became more of a reference point than an actual minimum wage; since fines, for example, were measured in number of minimum wages. The 2016 Federal Labor Law reform broke this linkage and returned the minimum wage to serve its original purpose (Diario Oficial de la Federación, 2016). Regardless, it is still lower than real and living wages in Mexico, lower than the basic needs basket, and insufficient to sustain a family (Franco, 2018). Even though AMLO has set his goal to double the minimum wage by 2024, by then, it would still barely reach real and living wages. Real wages in the informal sector, which represent half of the Mexican economy (INEGI, 2019), have also been identified to be far over the minimum wage level, and due to the nature of labor informality, it would not be relevant either way. Therefore, it is determined that increasing the minimum wage level, as proposed by AMLO, will not reduce poverty or improve the quality of life of Mexican households, since even his higher increase rates are not enough to actually make a difference in real wages. It is concluded that the minimum wage level in Mexico finds itself in a constant race to keep up with real and living wages. Therefore, other alternatives to reduce poverty, inequality, and increase quality of life should be explored, such as a Universal Basic Income, a new tax system, and a reevaluation of resource allocation.

Palabras clave: Minimum Wage, Mexico, Mexican Minimum Wage,.

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Table of content

Portada

Índices

Capítulo 1. Executive Summary

Capítulo 2. Introduction

Capítulo 3. Methodology

Capítulo 4. Literature Review

Capítulo 5. The Debate of the Minimum Wage in Mexico Today

Capítulo 6. Discussion: Will AMLO´s minimum wage strategy improve the quality of life of Mexican Householdsα

Capítulo 7. Conclusion

Referencias

Apéndice 1. Comparison OECD Member States

Apéndice 2. Comparison between Latin American Potential OECD Member States

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Zwach Lemos, A. 2020. Will AMLO’s Minimum Wage Strategy Improve the Quality of Life of Mexican Households?. Tesis Licenciatura. International Business Administration. Departamento de Administración de Negocios Internacionales, Escuela de Negocios y Economía, Universidad de las Américas Puebla. Abril. Derechos Reservados © 2020.