Wage Costs vs. Productivity in Central America

In Honduras and Nicaragua the cost that a company must assume to formalize a worker amounts to more than 70% of what they will produce, while in Costa Rica, El Salvador and Panama, it is just under 40%.

Monday, September 21, 2015

From a statement issued by the Inter-American Development Bank (IDB):

Formalizing a worker in Latin America costs 39% of what they produce

Wage and non-wage costs relative to productivity, are 50% higher in Latin America than the average in OECD countries.
High labor costs, in relation to what workers produce, and low investment in human capital are factors favoring precarious employment.
Promotingt formal jobs and a successful career path for workers is the key to growth.

In a ceremony held today in Mexico City, the Inter-American Development Bank (IDB) presented 'Empleos para Crecer' (Jobs for Growing), a detailed diagnostic report on labor markets in Latin America and the Caribbean that offers recommendations on labor policies to address informality and enhance productivity in the region.

More on this topic

Never-ending Struggle for Minimum Wage

January 2019

The determination of how much and how the minimum wage should be regulated, something that occasionally seems to be done in an arbitrary manner and for political purposes, continues to be one of the factors that most confront Central American businessmen and governments.

In Costa Rica, a 3% increase in the minimum wage was approved for 2019; in El Salvador, an increase is expected to be discussed, and in Guatemala, the commission in charge of the issue reported that no increases will be made this year.

It's Easy to Talk About Differentiated Minimum Wages

January 2016

From the comfort of a heated office and after receiving thousands of dollars in salary at the end of every month, well-intentioned people are trying to take away from those who have nothing, the possibility of having a job.


The indispensable struggle for the dignity in jobs and the eradication of slavery of the people living under a wild form of capitalism, has led to the introduction of minimum wages in modern societies.

Panama: Salaries Based on Productivity

May 2015

It has been announced that in June the private sector together with the government will define the methodology for wage increases, taking into account labor productivity and the cost of living.

How productive are workers for Panamanian companies is one of the elements that is to be taken into account in the way that the minimum wage adjustments will be defined from June.

Central American's low productivity

March 2015

Low productivity in Central American economies is the barrier which needs to be overcome if we want to grow in a sustainable way.

A study prepared by the Nicaraguan Foundation for Economic and Social Development (Funides) analyzes the evolution of productivity in different production factors in Nicaragua, Costa Rica, El Salvador, Guatemala and Honduras.

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