**Local Commerce Concerns Over Minimum Wage Increase in Tijuana**
The announcement of a 12% minimum wage increase set for January 2025 has raised concerns among local businesses in Tijuana, as expressed by Julián Palombo Saucedo, the president of the National Chamber of Commerce, Services, and Tourism (Canaco Servytur) in the city. This wage hike, while intended to aid workers, is anticipated to pose challenges for various business sectors, particularly micro and small enterprises.
“The impact is widespread, affecting businesses of all sizes. However, micro-enterprises will find it especially daunting to absorb this added cost,” Palombo Saucedo remarked. “Businesses must adjust to these changes, despite the difficulties, as compliance is essential.”
He further explained that in reaction to the increased operational costs brought by the wage hike, some companies might resort to reducing their workforce. This is expected to primarily impact smaller businesses, potentially pushing some into the informal sector due to financial strain. “Such a shift could exacerbate the existing issue of tax evasion,” Palombo Saucedo stated.
The federal government announced this rise on December 4th, noting that the new minimum wage will increase from 373.89 to 419.88 pesos daily in the northern border states. In response, Palombo Saucedo reiterated the importance of a fiscal reform that also targets informal businesses, which he claimed make up 55% of Tijuana’s business landscape. “Despite operating as businesses, many of these establishments do not contribute to the tax system,” he said, highlighting a range of informal operations from street vendors to certain professional services.
**Additional Context on Wage Increase**
In addition to the concerns aired by local businesses in Tijuana, the impact of the minimum wage increase is being felt across Mexico, with varying responses and expectations. While intended to benefit roughly 700,000 workers in Baja California, this wage adjustment also casts a spotlight on structural economic challenges.
A report from the Mexican government equates the wage increase to an effort to boost living standards amid rising living costs. However, economists caution that without parallel economic reforms, such changes might inadvertently strain informal sectors and smaller businesses already fighting high operational costs.
Furthermore, the wage hike is also expected to influence social security contributions, swelling costs for both employers and employees. As various stakeholders navigate this evolving economic landscape, calls for comprehensive fiscal reforms continue to mount, aiming to integrate informal economic activities, bolster public revenues, and ensure equitable economic growth across the region.
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