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Tables and Figures for: Measuring the Cost of Salaried Labor in Latin America and the Caribbean

By Social Protection and Labor Markets Division (VPS/SCL/SPL)

This paper presents new data documenting the cost of salaried labor in 20 Latin American and Caribbean countries. We gather data on the three main costs associated to hiring salaried labor; (i) minimum wages and other monetary benefits, (ii) mandated contributions for social insurance and other benefits and (iii) job security provisions. We present two new indicators. First, we calculate the average non-wage cost of salaried labor (NWC). This indicator answers the following question: for the average wage, what additional share of wages must be satisfied by workers and employers to fulfill all the law mandated non-wage costs of a legal salaried relationship. Our second indicator combines these non-wage costs with the nominal restriction that legal wages cannot be lower than the minimum wage. We calculate the annual dollar value of paying a worker the minimum wage plus all mandated non-wage costs as a share of GDP per worker. This constitutes the minimum cost of salaried labor (MCSL). We highlight seven important facts; (i) The average non-wage cost of salaried labor (NWC) for the region is 49% of wages. (ii) There is a large dispersion across countries like Argentina, Brazil and Peru with costs around 70% of wages and countries like Trinidad and Tobago, Jamaica and Chile with cost less than 40% of wages. (iii) Mandatory contributions are the most important component of the average non-wage cost of salaried labor with 27.3% of wages followed by additional benefits with 13.8% of wages while job security provisions account for another 8.4%. (iv) On average, mandated contributions from employers amount to 17.5% of average annual wages, versus 9.8% of mandated contributions from employees. (v) The minimum cost of salaried labor (MCSL) is on average 39% of GDP per worker. (vi) Variation of the MCSL across countries is even larger. For countries like Mexico, Trinidad and Tobago or the Dominican Republic the MCSL it is below 15% of GDP per worker while the minimum cost of hiring a salaried worker in Honduras is 95% of GDP per capita. (vii) Despite having below average NWC, the five poorest countries in our sample are those presenting the highest MCSL, due to high minimum wages relative to GDP per worker.

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Identifier https://doi.org/10.60966/08k5i4rc
License Creative Commons Attribution–NonCommercial–NoDerivs 3.0 IGO
Related Knowledge Product
Citation

Alaimo, Veronica;Gualavisi, Melany;Villa, Juan Miguel;Bosch, Mariano, 2017, Tables and Figures for: Measuring the Cost of Salaried Labor in Latin America and the Caribbean, IDB Open Data, https://doi.org/10.60966/08k5i4rc
Published date 2017-07-18
Modified date 2025-04-10
Tags/Keywords Minimum Wages · Non-Wage Cost · Payroll Taxes · Severance Payments
Language English
Temporal coverage 2013-2013
Country
Argentina
Bolivia
Brazil
Chile
Colombia
Costa Rica
Dominican Republic
Ecuador
El Salvador
Guatemala
Honduras
Jamaica
Mexico
Nicaragua
Panama
Paraguay
Peru
Trinidad and Tobago
Uruguay
Venezuela
Region Latin America and the Caribbean
Publisher
Inter-American Development Bank
Author
Alaimo, Veronica
Gualavisi, Melany
Villa, Juan Miguel
Bosch, Mariano
Data collection type Observational Data
Data structure Semistructured Data

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