In the Name of Curbing Inflation, Mexico's Government Is Hurting Workers The Economist
go to original August 18, 2014

Basilio González is an unusually well-paid Mexican public servant. The 70-year-old’s total pay this year will be 2.8m pesos ($213,000). That is ironic, considering that for 23 years he has been president of the National Minimum Salary Commission. During that time the minimum wage has dropped by 43% after accounting for inflation, according to the Economic Commission for Latin America and the Caribbean (ECLAC), a part of the United Nations. It varies by region but currently averages 66 pesos a day. At that rate, a recipient would have to work every day for 116 years to earn what Mr González will make this year.

Does Mr González deserve his generous haul? Judging by the length of his tenure, Mexican authorities appear to think so. Even before he took office, wage suppression had been an essential part of Mexico’s successful anti-inflation drive. Since 1991, annual inflation has fallen from more than 22% to less than 4%.

But it is Mexico’s poorest who have shouldered a disproportionate share of that effort. The price of the basic basket of goods bought by the poor has risen much faster than the broader measure of inflation over the same period. According to ECLAC’s data, Mexico is the only country in the region where the minimum wage is significantly below the poverty line. That includes much poorer places like Honduras. Big economies like Argentina, Brazil, Chile and Colombia raised their base wages from 2002 to 2011 to between two and three times the breadline. In those countries income equality improved sharply as a result, ECLAC says.

Read the rest at The Economist

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