WITH the Government of Jamaica last week declaring that the island is heading towards full employment, the Jamaica Observer took some time to explore the factors that might attract personnel to the labour market, including how labour costs in Jamaica compare to other nations in the region.

Research done by the Inter-American Development Bank (IDB) in 2017 puts Jamaica near the bottom of 20 Caribbean and Latin American countries studied.

In the ranking of 20 Caribbean and Latin American countries which measured wage and non-wage costs of labour, comparable data were secured from Argentina, Brazil, Bolivia, Chile, Colombia, Costa Rica, the Dominican Republic, Ecuador, El Salvador, Guatemala, Honduras, Jamaica, Mexico, Nicaragua, Panama, Paraguay, Peru, Trinidad and Tobago, Uruguay and Venezuela.

For Jamaica, the minimum wage per month is calculated at US$380, compared to US$883 per worker per month in Argentina, US$778 in Costa Rica, US$673 in Honduras, US$632 in Guatemala, Chile US$606, Colombia US$501, and Ecuador US$578. Trinidad and Tobago surpasses Jamaica with US$564 paid as minimum wage to workers monthly.

According to the IDB source, Bolivia ranks at US$371 per worker per month and the Dominican Republic at $341 per month, both falling below Jamaica.

The cheapest location to find labour, according to the study, was Mexico where monthly wages are US$253 per worker. Venezuela surpasses several other countries with US$685 in monthly wages paid to workers. In Brazil, minimum wage costs monthly are US$412 per worker.

The data comes from the June 2017 IDB publication entitled Measuring the Cost of Salaried Labour in Latin America and the Caribbean. The research was compiled by Verónica A laimo, Mariano Bosch, Melany Gualavisí and Juan Miguel Villa.

Severance costs

Jamaican workers, although ranked at number nine, still fall below their regional counterparts in other indicators apart from absolute wages. In other countries, workers are paid a bonus which is a 13th month of wages mandated by law. Jamaica was the only country in the survey to not have a similar law, while some countries like Bolivia, Guatemala, Honduras and Peru, have two bonuses per year.

It is also easier to get rid of wage labour in Jamaica. Notice days are only 28 days in Jamaica compared to 60 days in Argentina. Additionally, other nations have employer-mandated payments such as pension and day care, whereas Jamaica only mandates housing (National Housing Trust) payments.

Of the 20 nations reviewed, Jamaica is the country with the lowest number of severance days, numbering seventy, compared to other countries where employers must pay for between 101 to 179 wage days when firing workers or ending their contracts.

In Jamaica there are zero-mandated employer payments for health, whereas in the other nations payments for health can be as much as 18 per cent of total wage costs.

In total, non-wage mandatory contributions expected from employers are 18.8 per cent of wage costs in Jamaica, taking into consideration the full cost of labour including future severance, compared to 44 per cent of the cost of labour in Argentina.

The IDB notes that minimum wages are set by the governments of various countries, usually in order to protect the interest of employees — most especially public and civil servants. A country’s minimum wage is usually set by the central government based on standards which may vary from one country to another.

Other sources claim that Cuba is the country with the world’s lowest minimum wage. On a monthly basis, an employee in Cuba receives the minimum wage of 225 Cuban pesos — equivalent to US$9. However this is 2012 data which have not been updated.

The IDB outlined that it gathered data on the three main costs associated with hiring salaried labour: (i) minimum wages and other monetary benefits (ii) mandated contributions for social insurance and other benefits and (iii) job security provisions.

Bonus pay

The most common salary bonus in Latin America and Caribbean countries is called “extra month” (“aguinaldo” in Spanish). The aguinaldo is often equivalent to 50 or 100 per cent of monthly wages and is paid once or twice a year.

In countries like Brazil, Colombia and Uruguay, among others, workers are granted a 13th salary in the form of bonuses. Workers in Caribbean countries like Jamaica and Trinidad & Tobago do not have this right.

The IDB also notes that all countries in the region stipulate a minimum number of days of paid leave a year, ranging from 14 in Argentina to 40 in Brazil. In some countries, the number of days of paid leave varies with tenure. The mode in the region is to grant a paid leave of 15 working days, which goes up to 30 days in Nicaragua, Panama and Peru, and 40 days in Brazil . In Jamaica, paid leave is 14 days.

Mandatory contributions

The IDB says mandatory contributions are the bulk of the additional cost of hiring salaried labour. For example, mandatory contributions in Argentina entail pensions for old age, disability and survivor, health care, work injury, and a contribution to Asignaciones Familiares (family allowances). In Honduras, Jamaica and Mexico, there is a mandatory contribution for a housing fund. In the case of Mexico, additional contributions are required to support day-care centres for children.