MEXICO CITY (AP) — Mexico’s new government is increasing minimum wages across the country by 16 percent and doubling the minimum wage in a narrow stretch of territory along the border with the United States.

President Andres Manuel Lopez Obrador says the minimum wage had lost 70 percent of its purchasing power over the last three decades following devaluations and economic crises.

The minimum is currently equivalent to $4.40 per day, and will rise to $5.10 in January.

But in the townships on the northern border, the wage will rise to $8.80.

Lopez Obrador said Tuesday employers will be able to pay the higher wages because the value-added tax will be cut in half in the border zone.

The value-added tax will remain at 16 percent in the rest of the country.