3 countries with the highest minimum wage in Latin America (and what it’s for)

The countries with the highest monthly minimum wage in Latin America are Costa Rica ($650), Chile ($550) and Uruguay ($550).

The numbers, without any context, do not reflect the real value of that money in each country. For this, it is necessary to answer the basic question: what can be bought with that amount.

Ultimately, the salary is either low or high relative to the cost of living.

All three countries have a better economic situation than many other countries in the region.

However, the higher the wages, the higher the cost of living.

And the effect it has on people’s quality of life varies greatly depending on each family’s circumstances.

If it is a healthy young couple with only one child, where both contribute to the family income with the minimum wage, the situation is less urgent.

However, it is often the case that people living on the minimum wage are part of larger family groups, where sometimes there are elderly people with illnesses or small children who need to be fed.

With the economic scars left by the pandemic and the wave of inflation sweeping the world, the region is going through a difficult time marked by high interest rates and low economic growth.

Almost half of the Latin American population works in the informal sector, that is, they live according to what they can get every day, they have no employment contract, no stability, no social security and no savings for old age.

Although things are improving little by little in 2023, the pockets of the most vulnerable population continue to suffer, especially when most of your income goes to food or paying rent.

Here we tell you the stories of three families, each living in one of the three countries with the highest minimum wages in Latin America.

Costa Rica: Ana Yancy Segura

With a minimum salary of 352,165 colones (the current equivalent of $650 USD, the highest salary in Latin America), many might think that living in Costa Rica is relatively easy.

But although Ana Yancy Segura’s family receives a bit more than that thanks to the two-wheelers her husband earns as a security guard, she insists that “it’s not enough” to cover her basic needs and the needs of her three young children, aged 18, 11 and 3 years.

“It is impossible to save with this. If you save 30,000 (US$55) that’s already a lot, but for that you would have to stop paying fixed costs for the month,” the 38-year-old woman told BBC Mundo.

The family lives in Alto de San Blas, a modest neighborhood in the municipality of Cartago, southeast of San José, where many make a living by growing potatoes or onions and, at best, construction work. “It is not easy to look for a better-paid job here,” says the woman.

He calculates that he loses about 70 percent of electricity, water, cable and internet once every two weeks.. The second is devoted to paying for my sons’ transportation to school, a weekly rate for the purchase of materials, basic clothing and, above all, food.

Segura believes that he has increased the price of this last expense and that he does not allow himself a great luxury. He mostly buys rice, beans, coffee, milk… “If there is enough, chicken or meat.” Eggs very few, because they are very expensive and have gone up in price from 2,500 to 4,000 ($4.6 to $7.4) in three years. Now I buy sausage or chorizo, which is cheaper and lasts a week,” he explains.

According to the country’s National Institute of Statistics, the average monthly cost of a basic food basket was 58,887 colones ($109) per capita in May, 25% more than three years ago..

So, although the woman tries to make extra money by cooking and sporadically selling tamales or rice pudding, she says she barely makes a living off the cost of the ingredients.

Her husband has health insurance, but because their three children have chronic illnesses like asthma, there are medications and treatments that cost him more. “Now I have to pay a neurologist for my son, which is worth 70,000 ($130) per consultation. Imagine there are several of them,” he says.

Segura says she asked the government for financial help and scholarships for her children, but they were turned down because she was told her salary was enough. “And that is not true, because taxes are leading us to sink. Those salaries are not enough for either the average or the poor family, never,” he claims.

He received help from the NGO Techo to build his modest home on the same property where his three oldest children live with their families in another house. She misses her bed, because now she sleeps on a “trunk of two mattresses” with her husband and baby. “When the money drops, we’ll buy it”longs for.

Chile: Rosario Roman

At the age of 62, Rosario Román is the main breadwinner of a family of eight who live in two houses made of light materials built on land occupied by the homeless a few years ago in the municipality of La Granja, the capital of Santiago. Chile.

As a canteen assistant, he earns a minimum wage of US$550 per month (equivalent to 440,000 Chilean pesos).

She also receives an old age pension of US$218 per month which allows her to supplement her income.

He lives with his 57-year-old unemployed sister, who has multiple illnesses, and shares the plot with his nephew, his wife and four children.

The nephew does not have a fixed salary because he is paid per working day (about 19 USD) cleaning the windows of high-rise buildings. There is less work in the winter because of the rains, but in the summer he can get about $380 a month.

His wife, who is dedicated to household chores (they have a baby and three school-age children), sometimes sells cosmetics at the street market and also contributes to the family’s survival.

Between all of them, they can raise about 1200 US dollars. 70% of the budget goes to food.

“It’s very expensive to eat here in Chile,” says Román in an interview with BBC Mundo.

“I wish we could have a good basic diet. I don’t aspire to any luxury, but I want to live with dignity”.

With the remaining 30%, they pay for electricity, water, gas, transport and cleaning products. And in winter, they add the cost of paraffin for heating the house.

They do not spend on education or health (except for some medicines in the informal trade), nor do they pay rent.

In order to reduce costs, Román organized with his neighbors that buy food at wholesale marketsThey organized shared pots and activities to help each other through an organization called Fuerza Pobladora.

Her dream is to own her own home. At least I want to die in my house, even if it’s a small one, but it’s my house, says Román.

As this family is very large, on BBC Mundo we spoke with two smaller families who live on the minimum wage outside the capital.

In both cases (a single mother with two daughters in Quinter and a couple with a daughter in Lota) the biggest expense is food, and the second is rent. With what is left, they pay the basic bills.

But in Santiago, renting a house in a peripheral neighborhood can take up more than 60% or 70% of the minimum wage. That is why adult children often stay with their parents and, if they start their own family, build additional rooms on the same land.

In Chile, the poverty line per person is around USD 280 per month, which is about half of the minimum wage..

For families living in conditions of poverty and extreme poverty, there are state benefits that are paid in relation to the number of dependent members (or who do not generate income) within the family group.

Added to this are subsidies for adults over 65 years of age.

The costs of the basket of goods and services used to measure the consumer price index (CPI) are considered confidential data, according to the Central Bureau of Statistics.

The information provided by the government is the variation in the prices of the basket, but not the value of the products that make it up. Year-on-year inflation in the country fell to 9%, after reaching 14% last year.

Uruguay: Valeria Avondet

Valeria Avondet tries to find a difficult balance to live on the equivalent of about US$550 she earns every month working as a sales operator in call center From Uruguay.

This amount is comparable to the minimum wage of 21,107 Uruguayan pesos set by the country’s government, which, when converted to dollars, is one of the highest minimum wages in Latin America.

But Avondet, 24, is well aware of his strict limitations.

“Half of my salary goes to rent, tax (and) service costs”, he tells BBC Mundo. – I manage others.

There is room in that “other” category for essential expenses like food, although these are usually mitigated by the food bonuses you earn on top of sales commissions.

He shares the rent with two other people who live under the same roof: an associate and a police officer who has a better salary and a guarantor of the monthly payment.

Avondet usually takes the bus to work in Montevideo and walks back to “cut down a bit” on transportation costs.

Instead, he travels once a month to Paysandú, his hometown located about 380 kilometers northwest of Montevideo. Besides seeing his family there, he usually takes the opportunity to cross the bridge to the neighboring Argentinian city of Colón, where his food is cheaper due to the exchange rate difference.

In Uruguay, consumer prices without rent are 94 percent higher than in Argentina, according to the specialist site Numbeo, and the total basic basket was 18,759 Uruguayan pesos per capita (about $490 at the current exchange rate) in December, according to official data.

Avondet explains that in order to make ends meet on her salary, she barely spends what she needs on clothes and shoes at sales, she doesn’t have access to credit cards and has given up going to the gym she used to pay for.

“It’s also something I would like, but I know that if I pay for the gym I have to sacrifice other things,” he reflects.

“Uruguay is a very expensive country to live in”, he points out. “There are certain good things (such as) education that is free, in quotation marks, and in other countries it has a price: if you can’t pay for it, you don’t agree. But (Uruguay) has costs of living that you may not have in other countries”.