42% of each worker's wage. Basic health care, medical facilities, accident care, as well as care for illnesses are all taken care of under the social security fund. In addition, the employer is expected to pay about 5% of a fixed payroll tax into a fund that will help the employee find a home of his own easily. This fund is known as the 'National Fund for Employee Housing' or INFONAVIT. "The goal of this federal program is to provide benefits allowing employees to more easily acquire a home" 2% or 25 times the minimum wage, of a worker's salary must also be paid into the SAR or the Retirement Savings System under which provisions are made for the better-retired life of the employee. The money will be deposited into an account in the employee's name in a specific Bank, and the worker will be able to avail of it when the time comes.

The Federal Labor Law sets the wage costs and the salaries of the employees. According to the rules, the daily minimum wage must be set at a level that would enable the employee to live a decent lifestyle by which he would be able to acquire the basic minimum of material objects that would make his life easy and comfortable for him. The wage is generally set according to the geographic region, and is altered annually according to the rising standard of living. For example, in the year 1995, the basic minimum daily wage was fixed at N$16.74. "The National Minimum Wage Commission (Comisi n Nacional de Salarios M'nimos) has the authority to modify the minimum wage as needed" in Mexico City, the minimum wage is higher than in other parts of the country, and in certain industries, depending on the risk factors involved, the basic minimum wage is higher or lower than in others. The methods of calculating the wages may be according to the unit of time that the employee uses to complete his work or it may depend on the system to which all the parties involved agree to, like for example, when it is based on a commission, and it may also be a lump sum payment.

The labor laws for the Republic of Mexico vary for each type of employee, and each type of employer" Therefore it is a good idea to be prepared for these differences especially in cases where the employer is unsure of the laws of the state and is confused as to what exactly he must do and what will be the wages to be paid to his employee, and how will it be calculated, and what other benefits must he remember to pay. In essence, a true 'labor relationship' must be established between the employer and his employee when both want and desire a good working relationship with each other in which the employer will pay the employee in a manner that he finds adequate and satisfactory. In a labor relationship, there will always exist an inherent feeling of subordination as well as dependency, whether there is a written labor agreement or not.

Here subordination means that the employee will economically depend on the employer to pay his wages in an appropriate fashion, and it also means that the employee must take it upon himself to follow the directions of the person who acts as his employer. Further "commercial agents or sales promoters and other similar agents are considered employees of the company for whom they render their services when their activity is permanent, unless they do not personally perform the work or only participate in isolated operations" When the labor relationship has been established clearly among the parties concerned, then the employer is bound by the terms and the conditions stated in the Labor Law provisions of Mexico. However, while the Labor Laws specify the minimum rights of an employee in a medium or a large establishment, it is the Labor Agreement that will state the rights and the obligations of the employer to the employee and vice versa. This includes the work place specifications, time schedules, the innate scope of the employee's work, and the confidentiality obligations of the employee to the employer, and so on.

In addition to the minimum daily wages to be paid to an employee, that is the sum of $U.S. 4.50 daily, certain statutory fringe benefits are also guaranteed under the Labor Laws of Mexico. These include the benefits of an annual paid vacation, an annual bonus, profit sharing, and the benefits of social security and housing. Further "Social...

"The concept of salary takes into account any type of premium, bonus, commissions or any other payment that the employee is entitled to receive from the employer, both in Mexico and abroad, derived from his/her labor relation including additional economic benefits provided by the employer, such as, a car, club fees, etc." For example, when the worker was being paid according to commission basis, the daily wages of that person would have to be derived from the total amount of money that the employee had received as commission from the company over the past 365 days, a year, and divided by 365. If the employee had been working for less than a year, then his severance compensation will be calculated according to the number of days he actually worked for the firm and the commissions that he received during that time, and divided by that number. Further "A termination agreement to be entered into with the employee should be ratified by the local Labor Arbitration Board. If the agreement is not ratified, theoretically such agreement could be open to challenge by the employee arguing unfair dismissal" Finally "foreigners, depending upon their need to have presence and involvement in Mexico from a commercial point-of-view, may opt to do business in Mexico by employing a subordinate agent, establishing a Mexican company or acquiring stock in an existing Mexican company"
The issue of calculating 'Wage Costs' for an employee in a company in Mexico is one that must not be taken lightly or ignored. It can be accomplished by using one of the methods of calculation mentioned above, or more effective methods can be used. The method developed by the International Labor Organization offers twenty different indicators that would look at the several different levels and the trends and the structures of the hourly employment costs or wages that must be paid to the employee in the field of production and manufacture in certain selected economies all over the world. Employee rights will be given adequate protection, and there would be no cause for complaint when this method is used. These are some of the indicators listed: the employment to population ratio, status of employment, the issues of part time workers, the hours of work being put in by the employee, unemployment issues concerning youth and long-term unemployment, inactivity rates, labor market flows and labor productivity costs, etc.

Once the levels and the trends in the labor market are assessed, the next step is the creation of a database. This is developed using the data collected on cost levels according to the Indicator. The cost levels are usually written in U.S. Dollars, and any points of comparison will be made according to the figures indicative of U.S. market rates. The relative positions of other economies in relation to the economy of the United States of America will be taken into account "The indicator also shows the amount of non-wage labor costs as a percentage of total compensation costs, as well as the annual percentage change in total compensation costs over the period 1980-2001." The definition of 'hourly compensation cost' or hourly wages could be defined as the following: "Average hourly compensation cost is a wage measure intended to represent employers' expenditure on the benefits granted to their employees as compensation for an hour of labor."

The benefits to be paid to the employee would be accrued in different ways. One way is when it is paid to him in the form of gross earnings that will be paid to him directly, and indirectly to him in the form of the employer's contributions into the various benefits under the Labor law rules. This would include retirement and pension benefits, social security benefits, life insurance plans, housing schemes, and medical and accident and casualty relief plans. While the former is included in the 'wages' of the employee, the latter is included under the 'non-wage benefits' or where the employer is concerned, the 'non-wage labor costs' of employee benefits. "Compensation cost is closely related to labor cost, although it does not entirely correspond…