Mexico: Low Wages Fueling High Turnover

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By Emily Pickrell

March 7—A challenging economy in Mexico is encouraging high turn-over rates in employment as low-paid workers struggle to find salaries that cover basic living costs, according to a report on temporary employment issued March 3 by the Manpower Group.

As the Mexican economy suffers blows from a depreciating currency and low oil prices, low-wage earners are changing jobs at an 11 percent rate, according to Manpower, which recommends raising the average pay for low-wage workers in professional fields earning less than 10,000 pesos ($564) a month.

“It is very important to give an increase to the average pay for workers earning less than five times the minimum wage,” the Manpower report said. “This will reduce the cost rotation, which is resulting in vacant posts, a search for more candidates and the need to accept even higher wages and the necessary training.”

Mexico's minimum wage is currently 73.04 pesos ($4) per day or 2,191 pesos ($125) per month. While the majority of Mexican workers earn more than the minimum wage, salaries are still becoming increasingly insufficient to cover basic needs for those at the low end of the scale in their field, Manpower said, noting that the average service sector or telecommunications sales representative earns about 4,000 pesos ($226) per month.

The average wage for the lowest-paid workers in construction, oil and gas services, retail, telecommunications and agriculture is 3,918 pesos ($221) per month, according to Manpower.

While these wages are higher than the 2,702 pesos ($152) per month that Mexico's National Council for the Evaluation of Social Development Policy says is the minimum needed to cover basic food and housing expenses in urban Mexico, they are far lower than the 10,000 pesos ($564) recommended by Manpower as the salary needed to retain employees.

The result is a growing turnover rate and growth in temporary employees, which reached 2.4 percent in January compared to a 0.1 percent growth rate in permanent employment, Manpower said.

To contact the reporter on this story: Emily Pickrell in Mexico City at correspondents@bna.com

To contact the editor responsible for this story: Rick Vollmar at rvollmar@bna.com

For More Information

For more information on Mexican HR law and regulation, see the Mexico primer.