Prior to the Mexican Revolution of 1910 and the enactment of the Constitutional Article 123 in 1917, working conditions in Mexico were oppressive for most of the labor force.

Following the Mexican revolution in 1910, the constitutional congress issued the First Declaration of Social Rights (Primera Declaración de Derechos Sociales). Article 27 of the Constitution regulates the distribution of property. Article 123 sets forth a comprehensive scheme for the protection of Mexican workers.

A minimum wage, has also been established to regulate the minimum amount that must be paid to employees for their daily services, based on economic conditions in certain area (these amounts are fixed by a commission).

There are minimum salaries for each of the different economic activities (approximately 88). The general minimum salary is calculate in function of an 8 hours working day.

On December 20, 2006, the National Commission of Minimum Wages made public the actualized percentage of increase of the minimum wage, which became effective on January 1, 2007.

New adopted minimum wage in conformity with previous ones and according to the different geographic areas of the country are the following:

Geographic Area A: $50.57
Geographic Area B: $49.00
Geographic Area C: $47.60

The general increase for all geographic areas was of 3.9%, percentage which, along with year 2006 inflation and the one projected for 2007, will most surely be used as a reference in the revisions of Collective Working Contracts.

The higher wages in urban and suburban areas reflect the region's high costs of living.

After losing steam in the 1990s, Mexico's minimum wage has slowly begun recovering, bringing purchasing power sensitively higher. In real terms, however, it still remains well below the value it had in 1994, year at which Mexico was hit by an economic crisis and the peso was devalued.

While on one side only one-fifth of Mexican workers earn the minimum wage, the average wage is about 2.5 times higher. The latest is also commonly used as a yardstick for calculating many salaries, taxes and fines.

For more information, please visit: http://www.mexicanlaws.com/minwages2005.htm

Gonzalo Arrangoiz
Partner
Tellaeche & Arrangoiz, Mexico