The Mexican labor law makes interesting reading. Look here for the law in English: http://www.signetramos.com/laws/labor-1.htm and http://www.signetramos.com/laws/labor-2.htm
Minimum wage in Mexico City for 2006 - More than you ever wanted to know.
Posted by DavidBodwell on Tue Jan 10, 2006
Many will ask, "Why do we need to know this?" The answer is that many of us live here on FM-3 visas of the rentista type and those require:
Proof of monthly income. Three months of recent statements from a Mexican or foreign bank or financial institution showing regular monthly deposits equal to or above the equivalent of 250 times the daily minimum wage in Mexico City. In 2006 the min wage is $48.67 pesos, so the FM3 income requirement is about $12,168 pesos per month, or a bit more than US$1,100 per month. Times 1.5 for a couple. The minimum wage increases a little on Jan 1 each year.
Another thing that we might have to know (hopefully never) is that many fines and other governmental charges are also quoted as X times the daily minimum wage in Mexico City. That way, new regulations don't have to be printed and published every year. Just publish the minimum wage in Mexico City and everything else goes up accordingly.
Another thing that someone who lives here or is interested in living here needs to know is that:
The labor laws and method of calculating wages are a bit different from what we are accustomed to in the USA.
If a person is employed by the week, as most are, the weekly wage is 7 times the daily rate, not 5 as would be expected in the USA. If the worker is employed by the month, the wage would be 30 times the daily rate.
$=pesos. Assuming the minimum rate of $48.76 x 7 = $341.32 per week x 52 weeks = $17,748.64 + 15 days ($731.4) for Christmas = $18,480 plus a little more for the small extra tacked on to the vacation pay which varies with length of service.
So our minimum wage employee will take home about $19,000 per year, or about $52 per day (365 days). He pays no taxes on that. The taxes are paid by the employer.
Thanks to Rolly Brook for the above information. Now I would like to add some additional information to clarify the Mexican minimum wage situation even more thoroughly.
This is only part of the minimum wage story in México.
Any worker working for less than $100 per day is entitled by law to an additional C.S. en efectivo. I don't know what this translates to in English, but it is effectively a daily cash bonus that must be paid by the employer. For that minimum wage worker it amounts to approx. $12 per day, $84 per week, or $4368 per year. If you add this and the prima vacacional - vacation bonus - hat can be from $73 to $183 depending on the number of years the worker has worked for his employer, and you come up with $22,921. After you subtract the tiny $444 employee contribution to Social Security, you still end up with $22,477 or $61.75 daily take-home or almost 33% MORE than the nominal minimum wage. This is quite different than in the U.S. where the worker would probably, at the best, get 20% LESS take-home.
I am not defending the Mexican minimum wage, but once you know the real minimum wage is nearly 33% more, and, at least for the weekly worker, paid for 7 days instead of only 5, you have a much clearer picture of the situation. It is possible to at least live on the minimum wage in México. I don't think that it is really possible to live on the minimum wage in the U.S.
Now, let's go to Sinaloa where the minimum wage is somewhat less than Mexico City. This is what is of interest to us here in Mazatlán who have hired Mexican help. Here is what that weekly worker earns here.
$=pesos. Assuming the minimum rate of $45.81 x 7 = $320.67 per week x 52 weeks = $16,674.84 + 15 days ($687.15) for Christmas = $17,361.99.
When you add the "C.S. en efectivo" for that minimum wage worker that amounts to approx. $12 per day, $84 per week, or $4368 per year and the "prima vacacional" of $68.72 to $171.78 (depending on the days of vacation earned, from 6 to 15 depending on years of service) to this and then subtract the tiny $416.87 employee contribution to Social Security, you get a grand total of $21,381.84.
This makes the actual minimum take-home wage in Sinaloa $58.74 daily, or somewhat more than 28% more daily take-home than the nominal minimum wage. And if you figure that only 6 days a week (maximum) are worked, but 7 are paid, it's really $68.53 per day actually worked, and that's nearly 50% more than the nominal minimum wage.
Now you know the WHOLE minimum wage story.
Question from Dee Hulen:
The problem I have with the info is that I STILL don't know, after your many posts about this subject, what is required for a 2-day a week maid.
Here is a very simple explanation.
If you pay your 2 day a week maid more than the minimum wage PLUS the $12 daily "C.S. en efectivo", AND you have a signed, legal statement from her that she specifically opts out of IMSS\u2014you can buy the correct form from Martha Armenta\u2014then the only question is, "What is the Christmas bonus(aguinaldo) and what do you owe her for vacation pay?" These are both very easy.
If she works 2 days a week for you, that is 2/7ths or 28.57%. The aguinaldo would be 15 X her daily wage X 28.57%. The vacation pay (let's assume she has worked for you only one year) would be 6 X her daily wage X 28.57% PLUS 25% "prima vacaional" (vacation bonus).
See? It's actually very easy.