Where Does Mexico’s Christmas Bonus Go?

In the United States, the annual Christmas bonus is largely a fading memory. In Mexico, however, federal labor law guarantees employees a Christmas season bonus known as an aguinaldo. Though some employers provide a more generous bonus, federal labor law stipulates that the minimum aguinaldo must be equivalent to 15 days of an annual salary.

Nonetheless, only a minority of Mexican workers see aguinaldos. Of 53.2 million economically active persons, 20.5 million receive aguinaldos, according to current estimates.

Isalia Nava Bolanos and Luis Lozano Arredondo, economists with the National Autonomous University of Mexico (UNAM), told La Jornada daily that unfavorable labor market conditions shaped by less formal contracting and more informal and temporary employment circumstances make the aguinaldo a scarcer benefit enjoyed by the working age population.

Despite the shortfall, Lozano said the yearly Christmas bonus directly or indirectly impacts the lives of 70 million people. Both Lozano and Nava concurred that little is invested or saved from aguinaldo payments. Lozano calculated that 60 percent of aguinaldo income will be spent on food, 28 percent on debt servicing and the remainer on home necessities.

According to Nava, studies done in 2014 showed that 26 percent of workers use aguinaldo money for New Year’s Eve dinners, 21 percent for shoes and clothes, 18 percent for savings, 18 percent for vacations, health care or home remodeling, and 17 percent for settling debts.

Seventy percent of aguinaldo income is forked over to department stores, with the remainder spent at supermarkets, in toy stores and on commercial Internet sites, the UNAM economist said.

During the last few years, some employers have advanced aguinaldo payments in order to boost El Buen Fin, Mexico’s version of Black Friday. Large department stores routinely offer interest-free credit for several months as an incentive for consumers to purchase products.

Nava also cited a 2013 Deloitte Mexico study on Mexican Christmas shopping in which 57 percent of the participants surveyed reported that they would use aguinaldos for end-of-the-year shopping, while 37 percent said they would use the extra money to pay off debts.

“The study revealed that the people with less income, who are the majority in Mexico, will use (aguinaldos) to pay off debts, while women and those with bigger salaries set aside an important quantity for shopping,” Nava said.

Source: La Jornada, December 22, 2015. Article by Emir Olivares Alonso.

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