Wages Improve, Little Advancement in Middle Class

According to data from the ENOE (National Occupation and Employment Survey), the real wage bill (income of all workers in the economy) increased 3.8% during 2019 and 5.7% in the fourth quarter. These are undoubtedly important increases considering the weakness of the economy.

Average earnings have increased by a nominal 6.6%, similar to salary increases according to IMSS figures (6.4%).

The best news is that the income of the lowest quintile (20% of the population with the lowest income) increased 18.3% in real terms. The second quintile has an increase of 2.1%.

It is also consistent with data from the IMSS. From the 1st to the 10th percentile (10% of formal workers with lower income), wages increase between 12 and 16% in real terms.

From the 10th to the 25th percentile (from the 10th to the 25th place of formal workers with less income) the increase is 7.8% in real terms, a figure that is also very good. The effects of the minimum wage have mainly benefited this class of workers.

This has led to a reduction in poverty, which according to figures from CONEVAL, the percentage of the population that does not cover the basic food basket stands at 37.3%, when two years before it was 42%.

The pending task is the middle class, since the ENOE data show a -0.1% and 0.4% growth in the income of the third and fourth quintiles, while the IMSS data shows variations of -0.5% and 0.4% in the 50th and fourth percentiles. 75. This is probably a reflection of the contraction in investment, which inhibits job creation and salary increases for this group of wage earners.

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Although there are arguments against increasing wages without corresponding advances in productivity, the increase in the minimum wage in Mexico was a pending debt at a socioeconomic level.

But there is no free lunch. How many jobs have not been created by the magnitude of the increases in minimum wages? Difficult to quantify. But for an economy where consumption represents 67% of GDP, the increase in the wage bill represents an important support.