For 2015, A “Halt” to Gazolinazos And a Low Minimum Salary
By Jesús Aguado
The New Year arrives with a halt to the rise in the price of gasoline, elimination of the charges for long-distance calls by mobile phone companies, and a raise of 4.2 percent in the minimum salary, which now is 66.45 pesos in Region B (including Guanajuato).
The minimum salary does not provide a decent living in Mexico, according to the web page of the Mexican National Consumer Price Index (INPC).
Federal legislator Ricardo Villarreal told Atención that his party (National Action Party) presented a proposal in October 2014 to conduct a public consultation on the minimum salary. However, the Supreme Court rejected that request because the minimum salary is not a topic that can be discussed with the public. “As a party we will continue working to raise the minimum salary,” assured Villarreal.
On the question of the minimum salary one can live on in Mexico, the legislator answered “…66.45 pesos are nothing for the citizens. They cannot buy anything with that when the inflation keeps growing.” He said in addition, “It is complicated to live within a minimum salary. It should have an increase of at least 30 percent.”
That was in December 2014. The National Commission for Minimum Salary (CONASAMI), a decentralized agency that determines salaries according to article 94 of the Federal Labor Law, approved an increase of 4.2 percent. Now in Region A, it is 70.10 pesos, and in Region B, 66.45 pesos
The minimum salary and its effect on inflation
Last year on August 13, during a presentation about inflation, Agustín Carstens, governor of the Bank of Mexico, said that the increases in the minimum salary had to be analyzed very carefully because they do not work and, on the contrary, “…they could cause more inflation.” Carstens commented that with an arbitrary raise in the salary, companies could assume three stands: first, they could raise the prices of their products to recuperate the money destined for the salaries, which would bring inflation as an effect and, in his own words, “that defeats the goal of generating more incomes for the families;” second, the companies could start firing employees, and third, they would not hire more people or generate more employment.
The reality of the minimum salary
Josefina Valle owns a flower shop. Her business generates employment for six people, and she pays the workers, who live in the campo, 120 pesos a day, without any other benefits; by law they have the right to only one day off weekly. “I hire people from the rural communities because they can live with one hundred pesos a day,” she remarked. One of her employees told Atención that her husband works also, and with the two salaries they can survive.
Elodia Juárez works for the Public Services Department of the local administration. She makes 210 pesos daily. Juárez is a widowed mother of three children. “If I were making the minimum salary, I could not survive,” she said. Just in transportation to get to work, she spends 20 pesos (daily). “Can you imagine? Just one kilo of tortillas costs16 pesos, a kilo of eggs costs 38, and a kilo of beans, 25 pesos.” She counted and considered that the minimum salary had to be at least 100 pesos.
Leticia Nava, a 27-year-old lawyer, earns more than the the minimum salary. She has a housekeeper who receives 100 pesos a day for her services without legal benefits. When we asked if that amount was enough for the woman to survive, Nava said “Well, we also give her clothes and food to go, and she always eats at our home. We help her as much as we can.”
El Universal made an analysis of Carstens’s declarations in its October 17, 2014, online edition. It notes that the Secretariat of International Affairs states in a study that in 1976 Mexicans with a minimum salary could buy one kilo of beef steak, one kilo of eggs, one kilo of tortillas, ten bolillos (rolls), and a liter of milk. Currently, with the official minimum salary, Mexicans can buy just 500 grams of beef steak. A kilo costs 126 pesos.
Since January 2010, the price of combustibles has been increased monthly in a controlled way, with increases from 9 to 11 cents in premium and magna gasoline, respectively. The last gasolinazo, as the raises have been called, was in December 2014, when the price was 13.31 pesos for magna gasoline, 14.11 for premium, and 13.94 pesos for diesel fuel.
Finally, the senate declared a halt to the gasolinazo last year. However, it decided to increase the final price of gasoline and diesel fuel in December by 3 percent (according to inflation). That came into force on January 1 of this year and was to be the only gas increase in 2015. The final price of magna and premium gas is around 13.70 and 14.73 pesos per liter, respectively; the price of diesel fuel is around 14.53 pesos.
The basic food basket
Because of the increase in the dollar price—as we go to press, the buying rate is 14.14, and the selling rate is 14.99—the products of the basic food basket could increase in price because more than 40 percent of the products are imported. This would seriously impact Mexicans’ buying power.
The basic food basket is the set of indispensable goods and services a family needs to satisfy its basic consumption needs within its income. In Mexico, that basic food basket comprises more than 80 products and services. The INPC notes that in 2006, 134 hours of work at a minimum salary (54 pesos) was enough to buy all the products in a basic basket. Currently 193 hours are required at minimum salary. It is evident that the Mexicans’ buying power is decreasing, and the unemployment has increased.
The products of the basic food basket are divided into food; beverages and tobacco; clothing, shoes, and accessories; housing; furniture; electrical appliances; education and relaxation, among other categories.