As nations strive to address economic challenges and enhance the well-being of their workforce, adjustments to the minimum salary in Latin America have taken center stage across the region. Many LATAM countries including Brazil, Chile, and Colombia have recently introduced new employment laws to improve the work life of their people.
This article will highlight the recent changes to minimum salary in Latin America and compare the wages across the different countries. As the region continues to experience high inflation and growth, these are expected to change significantly in the coming years.
If you have been considering company formation in Latin America, you will need to think about payroll. Understanding the legal requirements for minimum salary in Latin America is key to staying compliant. At Biz Latin Hub, we can help you across the region, from Mexico City to Buenos Aires and everywhere in between. Our array of back office services is designed to support you whereever you are.
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What is the lowest minimum wage in Latin America?
Venezuela currently holds the dubious distinction of having the lowest minimum wage in Latin America. Individuals in the country earn a meager 130 bolivars (USD$8) per month. This is significantly lower than in other Latin American nations.
For instance, Ecuador has a basic monthly wage exceeding USD$425. Unfortunately, Venezuela’s minimum wage no longer serves as a viable benchmark for the private sector, where the average payment to lower-level workers stands at USD$126 per month.
This dismal situation is further exacerbated by the country’s persistent inflation, steadily eroding the already feeble purchasing power associated with the minimum wage.
Which country in South America has the highest minimum wage?
Uruguay has the highest minimum wage in South America and the second-highest minimum salary in Latin America. It is currently 21,106 Uruguayan pesos which is about USD$540. Chile follows with a minimum wage of 410,000 Chilean pesos, equivalent to about USD$475 per month. Costa Rica has the highest minimum salary in Latin America at USD$603 per month.
Major changes to minimum salary in Latin America in 2024
Colombia is set to witness a 12% rise in its minimum wage this year. This adjustment will elevate the monthly figure to 1.3 million pesos (USD$340). Notably, the increment translates to a substantial boost of 140,000 pesos (USD$36.63) per month in the minimum wage.
On December 1, 2023, the National Commission of Minimum Wages’ Board of Representatives issued a press release, announcing a unanimous agreement reached among the government, labor, and business sectors. According to this accord, there will be a 20% increase in minimum wages in 2024.
As per the press release, the standard minimum wage is slated to rise from 207.44 to 248.93 MXN (USD$13) per day. Simultaneously, within the Northern Border Free Zone, the minimum wage is set to escalate from 312.41 to 374.89 MXN (USD$20) per day.
The Brazilian government has recently disclosed that the minimum wage for 2024 will see an increase to R$1,412 (USD$292), surpassing the current amount by R$92 (USD$19). President Luiz Inacio Lula da Silva is anticipated to formalize this adjustment through a decree by the end of the current month.
This upward revision in the minimum wage aligns with the recently sanctioned minimum wage increase policy, as endorsed by Congress. The policy hinges on the combined impact of two metrics: inflation gauged by the National Consumer Price Index (INPC) and the genuine growth observed in the gross domestic product (GDP) over the preceding two years.
In May, the Chilean government disclosed that the law proposing a gradual elevation of the minimum wage in Chile to 500,000 Chilean pesos (USD$622.50) received approval from the Chamber of Deputies. This increment will be effective from May 2023 to April 2025, ensuring a consistent minimum wage throughout the entirety of 2024.
The Ecuadorian government has recently declared a USD$10 increment in the existing minimum wage for 2024. Consequently, Ecuadorian workers will witness a rise, setting the new minimum salary at USD$460. According to an official statement from the ministry, this measure is aimed at benefiting workers and was implemented following unsuccessful negotiations between business groups and workers’ organizations to reach a mutual agreement on the wage increase.
Biz Latin Hub can help you with minimum salary in Latin America
At Biz Latin Hub, we provide integrated market entry and back-office services throughout Latin America and the Caribbean, with offices in major cities in the region.
We also have trusted partners in many other markets. Our unequaled reach means we are ideally placed to support multi-jurisdiction market entries and cross-border operations.
As well as knowledge about minimum salary in Latin America, our range of services includes hiring & PEO accounting & taxation, company formation, bank account opening, and corporate legal services.
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