Social Issues

For Central Americans, a job is no guarantee of earning enough to live

Panama City, Apr 20 (EFE).- “I don’t have enough” is a phrase heard across Central America from working people whose earnings fall short of what they need to survive.

Chronically low wages and – in some countries – pervasive violent crime have driven tens of thousands of Central Americans to flee abroad, mainly to the United States, from where they wire home remittances that have become a vital support for economies in the region.

In its latest report on Latin America and the Caribbean, the International Labor Organization (ILO) identified low household income as the “most urgent” problem, exacerbated now by raging inflation.

The “working poor,” defined as employed people who remain below the poverty line, make up a large percentage of Central America’s roughly 50 million inhabitants.

The minimum wage in the region ranges from $213 a month in Nicaragua, where annual per capita income was $2,102.80 in 2021, to $640 monthly in Costa Rica (per capita income of $12,333).

In Guatemala, with annual per capita income of $5,456, the minimum wage is anywhere from $381 to $403 a month depending on the nature of the work.

While some minimum wage employees in Honduras earn as much as $640 a month, others receive only $331. The lowest official monthly wage in El Salvador is $243, with a maximum of $365.

With per capita income of $14,617 in 2021, Panama has dozens of different minimum wages, but economist Felipe Argote told EFE that monthly pay for workers at the low end of the wage scale is around $380.

Nicaragua has Central America’s lowest official unemployment rate, 2.6 percent. The highest level of joblessness, 11.8 percent, is found in Costa Rica.

At the regional level, around half of all workers are in the informal economy, where the minimum wage does not apply and jobs don’t come with benefits.

Mrs. Milagros (not her real name) is a 69-year-old widowed retiree in Panama who supplements her pension by working as a cleaner.

Milagros, who lives with a currently unemployed adult daughter, told EFE that her monthly income of roughly $700 – almost double the median minimum wage – is often insufficient to cover basic expenses.

“The poverty jobs do not help the economy,” Argote said, accusing Panama’s government of adhering to a “very old concept” that expects workers to make do with low wages in order to preserve jobs.

That approach, he told EFE, pushes workers into the underground economy “because it turns out being better to sell things on the street than to be in some formal jobs that pay less.”

The minimum wage in Guatemala “is 40 percent less than the cost of the basic food basket,” according to Luis Linares, an economist with the Association of Social Research and Studies.

“The low pay, the difficulty of finding a good job, and the lack of efficient public services ends up driving irregular migration to the United States,” he told EFE.

Candido Ordoñez, director of the Labor Market Observatory, said that in Honduras, a family must needs at least 300 percent of the monthly minimum wage to pay for food, housing, and utilities.

EFE gf-aca/dr

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