The cost of living in El Salvador increased by $214 between 2019 and 2023, according to the CDC.
According to the non-governmental Center for Consumer Rights Protection, the figure, calculated using its own methods, increased from $706 to $920.
10 Jan 2024 – 23:05
The cost of living is an estimate of the average family’s costs of purchasing the products and services necessary for a decent life. Each nation has its own way of establishing it. In El Salvador, the government does this by simply multiplying the cost of the basic basket by two. With this parameter, by October 2023 the cost of living will be $515.62.
However, the truth is that a family not only eats certain foods, but also consumes various basic services (water, electricity, telephone) and pays for transport, as well as non-food items. It is also necessary to allocate funds for housing.
For this reason, the non-governmental Consumer Rights Center (CDC) developed its own cost of living calculation methodology, in which it included 9 additional food products in the basic basket, such as cream and hard cheese; as well as 12 everyday items, including toothpaste, toilet paper and laundry detergent. The business also created a section for clothing and rent expenses.
SEE: More than half of Salvadorans are in debt by the end of the month in 2023, according to an IUDOP survey.
With these additions, the real cost of living for a family in El Salvador was found to be $706 in 2019. Using the same criteria, the CDC found that the figure for October 2023 (the date the study was conducted) was $920, up $214 from four years ago, a 23% increase.
The organization released these findings in a report presented yesterday, Wednesday, in which they also proposed raising the minimum wage.
“We must think that in order to lead a dignified life, a person must not only be guaranteed the right to food. The database should contain all those elements that a Salvadoran uses every day,” commented Danilo Perez, executive director of the Center for Consumer Protection.
Thus, neither urban nor rural minimum wages are currently able to cover these needs. Already with discounts in the city, this is about $328 per month. In the field, this figure reaches just $218.52.
The CDC included several data points in its report that indicate Salvadorans are having a tough time with their economy. For example, according to the 2023 FUNDAUNGO survey, 45.8% bought less food, and 14.2% replaced foods in their diet with other, less valuable ones.
Another study conducted by Francisco Gavidia University shows that protein intake has suffered significantly, given that 75.3% of Salvadorans have reduced their beef consumption; 40.3%, chicken; 32.2%, egg; and 23.5% reduced their cheese consumption due to high prices.
Hence, the poverty rate has increased so much since 2019. According to official data, there were 1.69 people living in poverty in El Salvador at the end of 2022, an increase of 10.12% compared to 2019.
In terms of extreme poverty, according to the Economic Commission for Latin America and the Caribbean (ECLAC), since 2019, the number of people in this condition in the country has increased by 200 thousand. The rate increased from 5.6% in 2019 to 8.7%. These are those who are no longer able to cover the cost of one basic basket.
The need to increase the minimum wage
Given the fact that poverty and extreme poverty have increased significantly, solutions must be found. One, according to the Consumer Law Center, is to raise the minimum wage to an amount that could approach the most comprehensive cost of living estimate, which would be $920.
“Obviously, this is a very high value for the current production potential of the national economy,” the department clarifies in a report published yesterday. For this reason, they propose to increase all minimum wages, which in El Salvador are 11, by 25%.
For example, for trade and services (same for industry), which is currently $364.80, it is proposed to increase it by $91.20, so it will remain at $456. It, as the reader will note, falls short of 50% of the comprehensive cost of living calculation of the same institution that offers it ($920), but is much closer than the current one, barely 40%.
SEE: The core basket fell in November, but is still the third most valuable in 2023
The lowest minimum wage in this country is in rural areas (coffee and cotton picking) at $243.46. According to the CDC’s proposal, they will increase by $60.86 and reach $304.32.
According to the institution’s calculations, thanks to this measure, wages will increase for 732 thousand people, which is 26% of the total employed population.
However, the most important data concerns the impact on poverty: in the case of relative poverty, it will decrease by 4.4 percentage points; At the extreme, the decline would be 3%, bringing the overall percentage to 5.7%, almost back to 2019 levels.
“This will improve private consumption, the main variable of which is wages. For companies, this will mean an increase in their sales, profits and investments,” the CDC concluded in its report.