Mexico's Pro-Business Candidate Wants to Double Minimum Wage

(Bloomberg) -- Presidential candidate Ricardo Anaya is pledging to more than double Mexico’s minimum wage as he looks to extend a rally in his support that’s put him within striking distance of the leftist front-runner in this year’s election.

Hailing from the business-friendly National Action Party, Anaya appears willing to defy his conservative supporters to raise one of Latin America’s lowest minimum wages. Anaya is even willing to make Mexico one of the first countries to introduce a universal basic income, said Salomon Chertorivski, his economic adviser and platform coordinator.

Minimum wage "should aspire to reach the poverty line within Ricardo Anaya’s six-year term which today is about 190 pesos per day for an adult and one dependent,” said Chertorivski, who spoke from his new office in Mexico City.

Anaya has the space to make a bold offer. Mexico’s minimum wage of 88.36 pesos per day ($4.73) is less than a third that in Chile and less even than Colombia, which has a lower income per capita, and less than half of Brazil’s. Still, the increases wouldn’t be pushed through at any cost. Each year’s hike would depend on the “opportunity to expand” and the government would watch the market reaction carefully, Chertorivski said.

The currency weakened for a fourth day on Wednesday, declining 0.7 percent to close at 18.8370 pesos per dollar in Mexico City.

Not Easy

Anaya needs to reach across party lines to convince left-leaning Democratic Revolution Party voters within his coalition not to switch sides to leftist candidate Andres Manuel Lopez Obrador. The fragile pact between the opposing factions has never been attempted before in a presidential election and has stirred up discord within Anaya’s PAN, now beset by internal rifts. Chertorivski most recently served in the PRD-led Mexico City government.

Anaya has cut Lopez Obrador’s lead in half since he announced he was running in December, according to Bloomberg’s poll tracker through Feb. 16. During that period, his support has increased 9 percentage points in opinion polls to average 31 percent, leaving him 9 points behind with the election a little more than four months away. Trailing the pack is ruling PRI party candidate Jose Antonio Meade with 20 percent approval.

Pledging higher wages would be similar to what Amlo, as Lopez Obrador is known, has promised. He calls for a gradual wage hike to 171 pesos over six years that’s adjusted for inflation, according to his platform. That compares to Anaya’s vow to reach 190 pesos by the end of his six-year term, also adjusted for inflation.

Bloomberg Intelligence - Potential U.S. Policy Changes Still a Risk for Mexico

Still, doubling the minimum wage won’t be easy, even though it compares so badly to Mexico’s counterparts in Latin America.

Each time Mexico has tried to boost the lowest salaries beyond the usual yearly hike the central bank has urged caution to prevent inflation from accelerating. Still, some business groups, such as Coparmex, have urged bigger increases than December’s 10 percent raise. Banco de Mexico said at the time that because of that hike, inflation would keep climbing in December, which it did, to a 16-year high.

"When it comes to poverty and inequality, if we keep doing the same thing, we’ll have the same results," Chertorivski said. "We need to begin a new policy on salaries, starting with the minimum wage."

To contact the reporter on this story: Nacha Cattan in Mexico City at ncattan@bloomberg.net.

To contact the editors responsible for this story: Vivianne Rodrigues at vrodrigues3@bloomberg.net, Robert Jameson, Philip Sanders

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