Minimum Wage to Rise 13% in 2026; Border Free Zone to Get 5% Increase

The federal government, along with labor and business sectors, has agreed to a 13% increase in the general minimum wage starting January 1, 2026. With this adjustment, the daily wage will rise from 278.80 to 315.04 pesos, which is roughly equivalent to 9,582 pesos per month. The Ministry of Labor and Social Welfare (STPS) described the agreement as a unanimous consensus within the National Minimum Wage Commission (Conasami).

In the Northern Border Free Zone (ZLFN), where minimum wages have climbed more quickly in recent years, a 5% increase was approved. The daily wage in this border region will go up from 419.88 to 440.87 pesos, representing about 13,410 pesos a month. The STPS explained that the smaller adjustment in the ZLFN is because wages there already provide greater purchasing power compared to the national average.

According to official estimates, the new minimum wage level would allow workers to afford two basic baskets of goods, moving closer to the federal administration's goal that by 2030, the minimum wage will cover 2.5 baskets. The STPS added that compared to 2018, the minimum wage has recovered more than 150% of its accumulated purchasing power, based on the government’s methodology for measuring access to the basic basket.

Conasami estimates that these adjustments will directly benefit around 8.5 million workers in 2026. The presidency has stated that higher minimum wages have helped millions escape poverty; however, experts note that while real increases in the minimum wage do boost labor income, progress on poverty reduction also depends on factors like inflation, employment, informality, and access to public services.

The increase comes in a context where general inflation in Mexico has eased compared to its 2022 peaks, but pressures remain on services and food prices. The Bank of Mexico has emphasized it will continue monitoring unit labor costs and the pass-through to prices. A higher minimum wage boosts consumption among low-income households, but it can also increase payroll costs for micro and small businesses with tight margins.

The “ripple” effect on contractual and public pay scales is often significant. Although, since 2016, most fines, dues, and administrative procedures have been decoupled from the minimum wage via the UMA system, many collective agreements and private schemes still use the minimum wage as a reference, amplifying the impact beyond just those who earn the minimum.

In the labor market, informality remains a challenge: more than half of the employed population works without social security benefits. Raising the minimum wage can incentivize formalization if accompanied by effective productivity policies and enforcement; without such support, there is also a risk that some employers in low-productivity sectors may turn to informality to contain costs. Enforcement and labor inspection will be crucial in 2026.

By sector and region, the increase could strengthen sales in local trade and services at the start of the year, while export-oriented manufacturing—boosted by supply chain relocations in the north and central Bajío—will face different wage pressures. The path of investment, companies' ability to improve productivity, and external demand will all be key to absorbing higher labor costs without losing competitiveness.

In previous years, adjustments to professional minimum wages have tracked those of the general minimum. Although details for 2026 have not been specified, Conasami usually updates these reference occupations, which can impact certain trades and specific services. Any mid-year update would depend on price behavior and tripartite agreements.

In summary, the 13% increase in the general minimum wage and the 5% adjustment in the ZLFN reinforce the strategy to recover real labor income. The potential benefits for consumption coexist with moderate risks to inflation and business costs. The final balance will depend on productivity, formalization, and inflation converging toward the target, as well as companies’—especially small businesses’—capacity to adapt to the new wage floor.