Monday, May 2, 2016

Learning Spanish -- bad journalists...

Ok so because of work, Spanish has become essential, and one of the ways I get this done is that I read articles in Spanish.  They are usually about economics and this is because its easier for me, so although the important thing is the language I cannot resist really reading the article.

This particular article was about a new accord so that labour contracts would now be registered with the central government, and that the minimum wages would be increased by 12%, 5% earlier this year and another 6% at the end of the year (trust me on that -- it adds up to nearly 12%...).  My teacher though the article was very boring and pointless, for me I though what was interesting was what was not said.

Why a 12% minimum wage hike -- the first since 2012, why registering the labor contracts?  The issue is really rather different; in fact the idea of registration is that the government will know who earns what, its a way of tracking the workers...and their wages. Mexico is going through a difficult period; having relied on oil revenues for all its tax income (70% of Federal revenues are PEMEX related), that dramatic fall in oil prices -- and the equally dramatic fall in production (From a peak of 3.3 MM/bbl per day to 2.2 MM/bbl per day) has had a huge impact on Government revenues.

So what the article should have been about is that the Federal government wants to better track the revenues of workers so that it can tax it...as the tax base shift from natural resources to income taxes, in order to get this, the Federal government "bribed" the unions by increasing minimum wages by 12% (which should reflect itself in higher wage packages).

The third issue that was not discussed in the article is that this 12% is really just a catch up from the Mexican inflation that has been running around 2.2% per annum for the past 4 years.

The information provided by the President was important, but the journalist was too bad/stupid to understand what was going on here.  In fact, the article discussed new labor laws to "better reflect the law 123 of the 1917 constitution" -- you would think that over a 99 years would have been enough to get the labor law right!  That's what got me started on this whole thing.


  • Mexico is planning for a major shift in its revenue base away from oil towards income taxes.
  • The federal government has put in place a registry of workers (and their labour contracts) to better track those revenues.
  • As a gift, the Federal government raised minimum wages by 12%!


Now that's the story that should have been covered by a competent journalist.

End of rant


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