**Possible Impacts on Local Commerce from Minimum Wage Increase, Says Canaco**
Businesses in Tijuana may face significant challenges following a 12% increase in the minimum wage set to take effect in 2025. According to Julián Palombo Saucedo, president of the National Chamber of Commerce, Services and Tourism (Canaco Servytur) in Tijuana, this change will impact businesses of all sizes, with microenterprises likely experiencing the most strain.
Palombo Saucedo explains, “Ultimately, it affects everyone, from micro to large business owners. However, for smaller businesses, absorbing additional costs is much harder.” He warns that some companies might opt to cut staff or, worse, transition to the informal economy—prompting major fiscal evasion challenges—as they struggle to cope with increased operational expenses.
This wage hike, effective January 1st, 2025, was announced by the federal government and will raise daily wages in the Northern border states from 373.89 pesos to 419.88 pesos. Palombo Saucedo urges for fiscal reforms targeting the informal market, which makes up 55% of Tijuana’s businesses, to ensure everyone contributes their fair share to the economy.
Companies failing to adjust to the added expenses may find themselves in precarious positions, potentially driving an increase in informal sector participation—a sector often criticized for its lack of tax contributions. Palombo Saucedo highlighted this issue, noting it involves more than just street vendors, including various unregistered businesses and professionals.
**Secondary Article: Broader Implications of the Minimum Wage Increase Across Mexico**
The recent decision to elevate the minimum wage by 12% across Mexico is expected to influence not just border regions like Baja California but businesses nationwide. This change, aimed at improving living standards for around 700,000 workers in Baja California alone, draws mixed reactions from various sectors.
While the intended increase seeks to better align wages with the cost of living, especially in areas facing high living costs, potential downsides include increased financial pressure on micro and small businesses. These enterprises often operate on thin profit margins and may find it challenging to accommodate higher payrolls, possibly resulting in layoffs or reduced hiring.
Moreover, these changes could indirectly impact social security contributions, affecting the overall cost structures for companies. In specific regions, employers are expressing concerns over absorbing these new expenses without transferring costs to consumers or reducing their workforce.
Stay updated with more developments on the economic impacts of wage reforms as stakeholders call for a comprehensive policy approach that includes tax regulation of the informal economy to ensure a balanced and equitable business ecosystem throughout the country.