Minimum Wage and the Canasta Basica (Basic Basket)

COSEP, the “Consejo Superior de la Empresa Privada” (or in English; Superior Council of Private Enterprise) has proposed a 6% increase in the minimum wage for members in the micro, small and medium sector and 7% for the remainder of the sectors. This would give agricultural workers, (farm hands) another 110 Cordoba’s ($5) per month and would increase them to 1,683 Cordoba’s ($80) a month.

To put that in perspective, the latest price (Nov.09) on the “Canasta Basica”, (Basic Basket) is 8,329 Cordoba’s per month. This “Basket” is a somewhat fictitious monthly budget for a family of five (3 adults, 2 children) and includes 50 or so items including rent, utilities, food and clothing. The “Canasta Basica” gets used a lot as a bargaining tool, especially in times of wage negotiations.

In the case of a farm worker, all five members of the family (including the kids) would have to be working full time to cover the monthly cost of the basket, begging the question, how credible is this measurement of a family budget, and/or; how realistic are the minimum wages for the nine sectors, farm hands being just one of them.

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Wage to basket

In many (maybe all?) C.A. countries, the cost/value/meaning of “the basket” isn’t always clear and the debaters often have different starting points: some say, if the basket goes up 3%, then the wage should go up 3%; some say the minimum wage should be half the cost of the basket, so that a couple can cover it, etc (though these arguments ignore the value of labor and instead rely on a figure). Once the basket costs require far more than double the minimum wage, it isn’t clear what the point is to indirectly or directly tying the wage to the basket, or basing it on multiples of it. It is common to see newspaper print charts or make analogies to regional basket costs, comparing them country-to-country. This seems useful, but often isn’t since countries do not share a minimum wage calculation anyway. For example, if the basket costs go up 7% in both El Salvador and Nicaragua, it doesn’t necessarily mean the same thing in both countries. Additionally, even if one discounts enforcement mechanisms, each country has very different percentages of people who actually make the minimum wage, as well as professionals who are paid multiples of it, etc. For the average worker, the basket cost adjustments rarely seems to “help you” satisfactorily in terms of pay, etc. It is not uncommon to have many of the core items in the basket go up 6% that year, have no item in the basket go down in price, then have the government assessment agency announce that the basket total will essentially remain the same or go up 1% (projections and alleged prices simply don’t match street prices for many people) .

For comparison sake, which is useful since many daily items cost the same in both countries, consider Honduras @ 10/2009: 6300 Lempiras (~$335) was the government-assessed core basket. The current minimum wage -which most people are not paid anyway- is L5500 (~$290), recently raised from L3600 (~$190) by Zelaya. So, in theory, the new wage is approaching the new basket, as it takes just 1.15 minimum wage workers to cover the cost of the monthly measurement; or, on a daily basis, one worker actually making that wage needs to work 35 days per month to pay for it (impossible, but it puts the total in perspective). If the wage debate starts out with the question: if everyone works all the time can they make enough not to die? Then the so-called minimum wage doesn’t really mean much and is actually somewhat embarrassing for a government to even endorse it. If the wage is tied to a couple’s income, it obviously means much more, and if tied to a single worker it maybe ideal but the wage may not be sustainable in rural or small-business settings. How many people the basket must cover is one thing, the true cost of the basket is another thing, what the basket means is another thing, and how many minimum wage workers it should take to earn that still another thing. In Honduras, the worker’s party rep on the government recommendation panel just claimed the minimum wage needs to be increased L3000 above what Zelaya already did, making it L8500 (~$455 – an amount that would allows any person making it to buy 1.3x baskets, based solely on their salary); the business rep on the same panel argues that the wage must be reduced as it is killing off new hires and small enterprises and that it is unrealistic to assume one worker at minimum needs to cover the basket anyway; they want the Zelaya L5500 brought down to L4400 ($235), where then 1.5 family members making it could still cover the basket.

The conversation is slightly different than it had been in the past, where fewer people are accepting the same starting point in the debate. The entire debate assumes people actually make the minimum salary (most people don’t) and that the salary requirements are enforced (in most developing countries they often are not as the enforcer is easily bribed). Much more so now that in decades previous, the sheer number of people why have left the country for the city makes an enforced minimum salary far more critical than it used to be as these people have rent costs and little if any land to produce their own necessities. This is likely the same in all C.A. countries, even if the basket specifics vary substantially.

From Tisey

What you tend to see here is that most people at least own where they live so there is no rent to pay. That usually comes about because "dad" gave his son some land, son continued to live at home until he could afford to start building, ...

Also, most of the people we had working for us also had a bit of land (again, handed down in the family) and grew quite a bit of their food.

If you look at how our caretaker's live, about all they buy is rice, corn meal, salt, sugar and vegetable oil. They might also buy or trade for some fresh veggies. Fruit comes from the trees nearby and includes papaya, guyaba, guanabana, mango, avocado, sweet lemon, orange, bananas, and platano. Cooking fuel is wood—lots of trees fall in the wind. Water is from an ojo de agua, electricity for lights from a solar panel.


So what is your point ?

The people don't need writings law to cover such expenses , because you think mother land and daddy give plenty to them??

I don't see reasonable, in the mean time people is getting land and more land, and building their utopia world with the privileges of their dollar rents, the rest of people must be resigned to live like God father pray.

up in the valley in waslala,

where my farm is..u dont see to many solar panels..they go to bed when it gets dark and up with the sun..not to many farmers can afford solar

The caretaker can't either

What they have are actually panels that I bought close to eight years ago and had in Costa Rica. There are a couple of other placed up here that got them through an NGO but, in general, dark==bedtime.