The cost of living in El Salvador Jumps 23% Over Last 4 Years: Report

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By Marco Echevarria

According to the non-governmental Consumer Defense Center, the figure, calculated with its own methodology, went from $706 to $920.

The cost of living is the calculation of the cost to an average family of the purchase of the products and services necessary for a dignified life. Each nation has its particular way of establishing it. In El Salvador, the State does so simply by multiplying the value of the basic basket by two. With that parameter, by October 2023 the cost of living would be $515.62.

However, the truth is that a family not only eats certain foods, but consumes a variety of basic services (water, light, telephone) and pays for transport to travel, as well as non-food products. It should also allocate housing funds.

For this reason, the non-governmental Consumer Defense Centre (CDC) has established its own methodology for calculating the cost of living, in which it has included the basic basket 9 extra foods, such as cream and hard cheese; as well as 12 everyday items, including toothpaste, toilet paper and washing detergents. The entity also made a section for the locker room and for the rental expense.

With these additions, he established, in 2019, that the cost of real life for a family in El Salvador was $706. Applying the same criteria, the CDC revealed that this figure, by October 2023 (date taken to do the study) was set at $920, $214 more than four years earlier, an extra 23%.

The organization made these findings public in a report presented yesterday Wednesday, in which they also proposed an increase to the minimum wage.

María Santos Díaz says that the economy of her and her neighbors has always been difficult, but now it is worse, if I pay for the light or the room I don’t invest for the food, here if today we have coffee we may not have sugar and so, there is always something missing. Photo EDH/Menly González

Should we think that in order to lead a dignified life, it is not only necessary for a person to be guaranteed his right to food. The base should contain all those elements that a Salvadoran uses in his day-to-day lives, said Danilo Pérez, executive director of the Center for Consumer Defense.

Therefore, neither the urban minimum nor rural minimum are able to meet these needs at present. Already at discounts, in the city this is about $328 a month. In the field, the figure reaches just $218.52.

The CDC included in its report several data indicating that Salvadorans are not having a good time in their economy. For example, 45.8% have bought less food and 14.2 percent have replaced their food diet products with lower-value ones, according to a FUNDAUNGO survey of 2023.

Another study, carried out by the Francisco Gavidia University, indicates that protein consumption has been significantly affected, since 75.3 % of Salvadorans have reduced their consumption of beef; 40.3%, chicken consumption; 32.2%, egg consumption; and 23.5% have decreased cheese intake due to high prices.

Hence, poverty rates have increased so much since 2019. According to official data, at the end of 2022, 1.69 people in El Salvador were in poverty, which translates into an increase of 10.12% over 2019.

In the area of extreme poverty, according to the Economic Commission for Latin America and the Caribbean (ECLAC), since 2019, the number of people who have fallen in this condition has risen by 200,000 in the country. The rate rose from 5.6% in 2019 to 8.7%. These are those who are no longer able to cover the value of a single basic basket.

The need to raise the minimum wage

With in mind the fact that poverty and extreme poverty have increased in important numbers, it is necessary to find solutions. One of them, according to the Center for Consumer Defense, is to raise the minimum wage on a scale that can be close to its more comprehensive cost-of-living calculation, or $920.

“Obviously, this is a very high value for the current productive capacity of the national economy,” the institution , , , , , , , lysing in the report published yesterday. They therefore propose a 25 per cent increase for all minimum wages, which in El Salvador are 11.

For example, for the Trade and Services (which is the same in Industry), which is currently $364.80, an increase of $91,250 is proposed, which would remain at $456. The same, as the reader will note, does not reach 50% of the integral calculation of the cost of living of the same institution that raises it (of $920), but is much closer than the current one, only 40%.

The lowest minimum wages in this country correspond to the rural area (coffee and cotton collection) and are $243.46. With the CDC proposal, they would increase by $60.86, so they would reach $304.32.

According to the institution’s estimates, with the measure, 732,000 people would improve their wages, thus reaching 26 per cent of the entire employed population.

However, the most important data have to do with the impact on poverty: in the case of relative poverty, it would fall by 4.4 percentage points; in the extreme, the decrease would be 3%, bringing the total percentage to 5.7%, almost to the level of 2019.

It would be improved by private consumption, whose main variable is wages. For companies, that would mean an increase in their sales, profits and investments, the CDC concludes in its report.

This article has been translated from the original which first appeared in El Salvador