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Impacts of the 2012 Minimum Wage Increase on Worker’s Compensation in Mexico

This presentation discusses the ramifications of the 4.2% increase in Mexico's minimum wage in 2012, which raised the daily wage to 62.33 pesos ($4.60) in Zone A. It highlights how this adjustment, exceeding the inflation rate, affects wage negotiations and various labor indicators, including seniority premiums and penalties. The presentation also covers tax exemptions related to the minimum wage and its implications for worker compensation, emphasizing the need to update payroll systems and activity classifications following any workplace accidents.

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Impacts of the 2012 Minimum Wage Increase on Worker’s Compensation in Mexico

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  1. Ramifications on Minimum Wage Increase Worker’s Compensation Título de lapresentación Fecha January 18, 2012

  2. Effects of 2012 MW increase… • Increase for 2012 at 4.2% for all three of the country's geographic zones, slightly above the rate of inflation expected for 2012. • The increase brings to 62.33 pesos($4.60) a day in zone A, which includes Mexico City and several cities on the U.S. border including Tijuana, Mexicali, Tecate and Ensenada.

  3. Effects of 2012 MW increase… • The labor ministry said the increase in the MW, which is frequently used as a benchmark for other wage negotiations, is above the expected rate of inflation for 2012. • The wage commission considered that wage negotiations should consider the specific conditions of each company, rather than be based on the minimum wage review, the Labor Ministry added.

  4. Labor indicators • There are several calculations in Federal Labor Law in function of mw, i.e. • Base of Seniority Premium, (should be adjusted up to two minimum wages 124.66 pesos. • Penalties for employees and employers stated in Labor Law are fixed in MW.

  5. Tax exemptions • In addition of a labor indicator, the MW is a tax indicator…Get your payroll system updated for tax purposes. • Maximum Top of 25 mw increased to $1,558.25 pesos daily. • Discounts on cafeteria should be 12.47 pesos a day (20% of MW) • Tax exemption for food coupons is 40% of MW = 24.93 daily, 174.51 weekly.

  6. Tax exemptions Examples or effects in Income Tax limits:  • Savings Fund Limit on 1.3 MW a year • Overtime 50% up to 5 minimum wages • Christmas bonus 30 MW • Vacation premium 30 MW • Profit sharing 15 MW

  7. Worker’s compensation Workers compensation in Mexico is measured by  • Classification of activity • Work accidents   Recommendations • Activity classification should be updated • Every time there is an accident the company fills out a form. • Keep track of every work accident

  8. Contacts Elisa Ibanez eibanez@mmc-mx.com Lorena Soltero lsoltero@mmc-mx.com Guillermo Gomez ggomez@mmc-mx.com Victor Paz vpaz@mmc-mx.com Mauricio Monroy mmonroy@mmc-mx.com www.mauriciomonroy.com +52 (664) 972 9072 Blvd. Agua Caliente 10611 Suite 805, Col. Aviacion Tijuana, B.C. CP 22420

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