Employment In El Salvador ~ Different

From what we have observed:

Having a job is a terrible way to earn a living in El Salvador.

Warning:  Not a study. All numbers are based on asking people what they make, what their families make, and reading newspapers/reports in a language I barely understand. Kindness appreciated.

    I cannot say what all employment in El Salvador is like, but from what I’ve seen, money is out there, but jobs are a terrible way to try to get it. That said, I just got a part time job, and I’m extremely happy about it! But that’s another story.

What I mean when I say that jobs are a terrible way to make money, or even to support yourself, is that it seems the numbers (cost of living versus income) don’t add up. I have much more to learn about how things function here. How things stay afloat. Don’t start telling me “Of course the numbers don’t add up, think immigration and remesas dumbass.” …..  instead just let me ramble a bit…

I hear and read varied numbers, depending on the source and their intention, about wages here, but no matter who is talking they are low.  Stupid low. Maids and gardeners will work all day for $10-15.00. A regular full time professional job earns about $400-600/ mo and professionals with advanced degrees pull in about $1000/mo and are happy to get it. I have read that 40% of the population earns less than $300 a month. That is less than $10 a day. But a big mac meal at Mcdonalds costs $4.99, and Mcdonalds is packed.

A standard work agreement (from what I’ve seen) is for 44 hours per week for the monthly salary, though most people exceed that. The schedule may technically be for five eight hours days, and a half day Saturday, but that is just a framework, not a defensible limit. The six day work week seems standard, and overtime without pay is expected.

Human contributions in the form of effort, thought, skill and creativity do not seem to be valued highly in and of themselves.

You knew that already, right? But I want to elaborate about the value of other things.

There are huge value imbalances, compared to what I am culturally accustomed to in the United States. Rent for retail space is disproportionately high. At the malls, in the business districts, and in fashionable areas they are comparable to rents we payed in the US for retail space, but deliver approximately 1/5 the transactions. Looking at the traffic in malls, and having been in retail, I question the store’s survival. There is less expensive retail rent in less wealthy areas. The potential income for th

e retail establishment goes down proportionally in less expensive areas (just like the US), so the math seems close to the same. Rent exceeds what I would expect the net income to be.

House rentals, although low compared to the San Francisco Bay Area, are not low when compared to prevailing wages. A professional job earns $400 a month and rent in low income portions of the city are $400 a month and food prices at the super market are nearly as high as the US.

The real-estate is valued highly, as a tangible thing. (productive or not)

Having been to malls, both the stylish and the not-so-stylish, I have to say, I cannot afford to shop at them. There is an abundance on name brand goods and fast food franchises all with prices comparable to those in the US. Some local food chains have slightly lower prices, but for the most part, a mall is a mall. Clothing and shoes seem to cost about what they do in the states or more. I have difficulty figuring out who buys enough of these goods to support the businesses at the mall. Items produced outside the country, and almost anything with a lot of packaging, is regarded as vastly superior and more valuable than anything produced locally. (My husband joked that in El Salvador, the money only flows one way….out)

Goods are valued. Imported goods are valued even more highly.

So I asked myself the question, “How do businesses stay open, when rent seems out of proportion with the probable revenue, and the cost of physical items needed to do business (like items needed to live) seem way out of sync with the economy?”

Repeat: Human contributions in the form of effort, thought, skill and creativity are not valued highly, in and of themselves.

When running a business in the US, the cost I could not get under control was LABOR. It was the factor we could not reign in enough to be fully profitable. In making a business plan here, the conflicts with potential partners seemed pretty pronounced when addressing the topics of labor cost, and the worth of skill-experience and ingenuity compared with tangible assets. In El Salvador, labor cost is low enough to compensate in large part for other imbalances in doing business. More value (money) is devoted (proportionally) to physical and tangible things than to those who do things with those assets to make them produce. Having moved here from Silicon Valley, where the brilliance of the team is what makes or breaks the company, and companies distribute value (money) with that in mind, I find the different balance striking.

Stuff is worth more than People by far, in this economy.

This economy might not be sustainable without remesas (remittances or money from Salvadorenos living abroad sent back home) sent from outside the country, which compensate for the inequalities between the cost of goods, and the lack of funds available to buy them (duh). I recently read some impressive numbers on the percentage of goods producible but which are imported by the tons. Pineapples, bananas, beans, the list of things that grow here quite well but which are imported and consumed here with money that more or less, does not exist.

I read that on average, Salvadorans spend 120% of their income annually. Wow.

Do the remesas sustain the system, and in effect make it OK for companies to pay such low wages? I’m just asking. I don’t know the answer.

 

Below is some information and quotes


Check out this quote from The US State Dept:

Remittances from Salvadorans working in the United States are an important source of income for many families in El Salvador. In 2010, the Central Bank estimated that remittances totaled $3.5 billion. UN Development Program (UNDP) surveys show that an estimated 22.3% of families receive remittances.

The TOTAL GDP in 2010 was about $21.9 Billion so almost 20% of the entire economy is remittances.

Another eye opening set of stats from American Market Media:

EL SALVADOR: REMITTANCE NATION

  • 2.5 million Salvadorans, legal and illegal, live in the U.S., more than one third the total in El Salvador itself.
  • El Salvador’s principal export is its people, after that, coffee, sugar, rice.
  • El Salvador’s principal import are remittances from Salvadorans in the U.S., estimated at $3.5 billion annually, 19.1% of the GDP.
  • Remittances to El Salvador have increased by more than6 percent a year for more than a decade, with double-digit growth more recently.
  • Remittances to El Salvador represent 133 percent of all exports, 655 percent of foreign direct investment, and 91 percent of the government budget.
  • Remittance flows to El Salvador are so large the country completely dollarized its economy in 2001.
  • 22 percent of households in El Salvador receive remittances, more than any other Latin American country. Three quarters of that money goes to household expenditures.
  • El Salvador has a 13 percent sales tax and no property tax. Since remittances are primarily used for consumption, they amount to the poorest people in the country subsidizing the government.

 

Anyway, I have a part time job teaching English and I am very happy about it! I earn under $5/hr, and from a semi-secret

survey of other teachers, believe I make a little bit more than most (I’m an imported expat woman so…….). I’m very happy to have the job. I will be earning a little money, getting to know people, learning the city and the culture. The process of looking into employment has got me thinking maybe a little too hard.

I now earn approximately 10% per hour, what I did in the job I left. That is food for thought, and I’m just chewing.

 

employment in El Salvador

Why is this pig eating Lay's potato chips?

So what do YOU think? We want to hear from some other Salvadorenos about these ideas. Write your comments below and send this to your friends.

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About Nanelle

Nanelle is a 43 year old former Ballet Dancer and Police Officer. Join her on their move to El Salvador, Living life in El Salvador as an American expat woman and loving it.

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64 Responses to “Employment In El Salvador ~ Different”

  1. Riose Says:

    I love your blog. keep the stories coming. We need more people like your family in El Salavador.

    • harry Says:

      There are people where I live, the staff, who make six dollars per twelve hour shift. The average pay is six dollars per day. There is a job website that lists thousands of jobs in el salvador and the average pay is nil and you are correct on what professionals get paid. that said, a lot of people pay less than one hundred dollars a month in rent. you'll also note that it seems that people have plenty to eat. no one appears to be starving. and no, people don't seem to respect the contributions that others can make. in fact, making a contribution puts places someone further down the totem pole. it's the person who yeahs or neighs the contribution who places themselves at the top of the heap. and it is the top of the heap who do the shopping and for whom everything is yielded over. and they aren't interested in opening up their ranks and creating a wider market for their sales. they'd rather take it real slow and take it all.

  2. Jennifer Says:

    Very interesting. You actually made me sit down and think about the approximately 50 friends and family that we have. Of about 50 families I can only think of 2 that do not receive any money from the US. I do think though that where you live makes a difference. We are in Morazon which was one of the hot spots during the war and a great many young men were sent away from here during that time. My husband was sent to the US in 1986 when he was 15 years old. Almost all of his male relatives were already there working. The expectation was to work and send any money that you made back home to your mother. This tradition still continues today. Most of the young people that I know already have plans to emigrate to the US in the near future. Thanks for a great article that made me think and Congrats on your new job. Good Luck!

    Jennifer Reyes

    • Andy Says:

      WOW. You really do know what you are talking about then, when it comes to the subject. I keep wondering what could happen if all the bright young people stayed here and started their own businesses. (YES…in case you didn't know, I think small-medium locally owned businesses are the magic pill for almost every problem) (I know I'm delusional, and I don't mind)

  3. Manuel Says:

    I totally agree with your article. You have learned in a few month Salvadorean economy and maybe what most of us don't understand or takes a lifetime to do it. 10 years ago most of the universitiess prepared students to become good employees and give the extra mile, to become and graduates with a career path focused to get high paying jobs. In real life, the executive positions are limited for the minority. Multinational companies are the only ones that may seem worth leaving your life for, at least to have a good income, but with a lot of stress and family sacrifices and all of this makes you think, later on, if it the $$$ is really worth it.

    • Andy Says:

      To be honest, given my belief that the culture is more family-centered than that in the United States, what you just brought up makes the work structure seem counter-intuitive. It is a whole other question for me to learn about. How do families seem so close, when so many members are devoted to extreme work schedules, or are out of the country to send money back? It may take time.

    • ex-ESL Says:

      Manuel, I lived in ES 16-17 years ago, and the universities/education system were not so idealistic then; it seemed the prevailing thought was to do as much as one had to, but no more, to keep a job. 5-1/2 day work weeks were/are brutal. I didn't hang with expats at all, but immersed myself in Salvadoran experiences as much as possible (being on a Fulbright, I lived in Col. Escalon; couldn't afford San Benito — the only two colonias acceptable to the Embassy at the time – and paid twice in rent what my mortgage back home was). Even though discouraged (nearly prohibited by the Embassy), after the first few weeks in taxis, I almost exclusively used public trans — buses and microbuses — to get around San Salvador. I had use of a car only the last month I was there, when I did seminars at universities in SS and in other cities. I long to return to ES to retire some day. What is ironic is that most of the Salvadoran students I taught in the U.S., all of whom returned to ES for a time, now live in the U.S.

  4. Anita Says:

    I really like your blog, and especially this article. I returned to States about five months ago after having lived in ES for two years with my husband who is Salvadoran. We were discouraged about the difficulty of living there, but now after experiencing extraordinarily financial problems with trying to make it Florida, we are returning to San Salvador to live in a few weeks. Even with the situation that you accurately described, we will be able to live there more comfortably on our existing income. Speaking in "sotto voce" with many locals, it is more or less believed that the "luxury" malls may be fronts for illicit businesses. As you pointed, out the apparent income cannot support the maintenance of these establishments. As for the remesas, many of the families that I know, including my husband's, rely on these as their only income. This money has come to viewed as expected both by the locals and by the government, as well. While I have a soft place in my heart for this little country, I fear for its future with such a precarious infrastructure. Good luck with your endeavors; maybe we can meet when we return.

    • Andy Says:

      I had actually thought about money laundering. No! not as a career, but as an explanation for how some of the mall stores stay open. I have heard a people talking about money laundering being a huge industry in El Salvador, given the currency is the US dollar. I dunno, but it's a thought. Over the past few days I have come to think that the remittances, though necessary to support family, are in fact destructive to the economy. I have formed the same opinion of most foreign investment, in the forms it manifests in country. I will say "most", and "as manifest", because I can only claim to have even looked into a couple examples, and those I only looked into on the surface. (I'm not an economist, I just play one on my blog).

      • harry Says:

        Some folks who are earning two hundred dollars a month, rather than receiving an additional two hundred dollars a month as a relatives gift to them, which they can combine with what they are earning, find that they are in a position to retire and would probably be alarmed and unhappy if the money stopped pouring in.

  5. Lara Says:

    Actually this is not totally true many people earn a lot more money. you can check this website to see some salaries http://www.latintopjobs.com/
    how do you think someone can afford to live in Santa Elena?? or in many other expensive neighborhoods. not even with remesas they would be able to do that. Many professionals earn at least $3000. people that work in the government, some banks and some companies. Mostly managers, doctors lawyers. Think about the very expensive schools like Britanica, American School, liceo frances, escuela alemana and many others, I doubt this kids' parents get any remesas at all. If you go to la gran via this are the people you will see shopping there.

    • Andy Says:

      That link has very good info. It is certainly good to read about better paying jobs here. There is visible money here. Like I said, my information is from talking to people, asking questions, reading reports and looking around. We spend a good portion of our time at malls, on street corners, in cafes, doing foot-counts, and make a point to learn what we can from business-people, and land-lords for potential locations. My information is far from complete, and based mostly on information gathered from working out our business plan, talking to people in our circles, our neighbors, etc! Thank you for the link, it has good information and broadens the base of information!

  6. Patrick Says:

    My wife and I are thinking about moving to El Salvador in the near future.

    I am very glad and thankful that you folks are sharing your experience as "newbies" in El Salvador.

    One of my main concern is earning a living there. I think my wife can easily get a job since she has a PhD in Linguistics and fluent in Spanish. As for me, it would be a challenge since my work experience has been in finance and I am not fluent in Spanish.

    Looking at the "street" numbers and opinions you folks posted here, it would seem more productive to be a producer of goods/services to sell outside the country than to be a worker inside the country. Since labor is cheaper than the other resources (land & capital), would it make sense to "in-source" jobs from other countries (since it has worked wonders for Brazil, Russia, China & Inida)?

    • nanelle Says:

      Good question. I do not know enough about the real numbers or full effects of selling labor locally. If I understand your question fully, which I may not. I am aware of factories and call centers here which provide jobs. I do not know if those jobs are the kind a country needs to be fully self sufficient, or if they benefit the economy as much as they claim to. I just don't know. My instincts tell me that arrangements such as tax free zones, where companies can come in, use the labor and export the product or service right back out, seem like a weak way to provide jobs. (Please don't be offended that I regard it as pimping the populace. Forgive my crassness, I just quit a job in law enforcement and haven't got my perspective back) (Do pimps make good money? Hmmmm) I bet there is money to be made in the business of in-sourcing almost any job or service. My belief is that too much of that and the country is left with a bunch of very tired minimum wage workers who want to leave the country. (pure opinion, not based on real knowledge of the subject).

      I do think that the best way to make money here is to run your own business, whether it is selling things inside / outside the country, whether it is physical, virtual or consulting or even something novel that a person with a PHD, or a background in finance would be well capable of coming up with. (yes I'm jealous of that kind of smarts). For me, that jobs are (for the most part) a limited or limiting option, the problem is a challenge for the creative, who just don't want to go down like that.

      I wonder though …. with your background in finance maybe you still can get a job even not fully fluent? in particular since you mentioned in sourcing jobs. Can work in your field be done long distance? Are you in a good position to be a consultant? Also… maybe the website (latintopjobs.com) posted in the previous reply has something good in your field. I recently got a job teaching English, in part, to develop fluency (linguistic and cultural). With any kind of base, you can develop quickly if you force yourself.

      I'm glad you aren't discouraged by the articles. I hope it shows through that I am very happy about our move, and love it here! I hope to hear about you making the leap too!

  7. Mike Says:

    To me, as a trained economist w/ 40 years experience, this is a fascinating discussion. Frankly, when I first arrived I thought, "Great, a small, manageable, open economy that I can get a grasp upon."

    The longer I'm here the less I know. But I never cease to be amazed by the mysteries and intrigued by it all.

    Hoping we can all do better jobs to be better and make better for all.

  8. Patrick Says:

    I thought I have a crass sense of humor, but boy, oh, boy, you got me beat! My wife on the other hand might give you a run for your money.

    It's good to know that there're some sort of on-shoring going on in both goods and services sectors.

    To have a self-sufficient economy, something's got to be pimped/leveraged (ex: the US pimps its credibility by issuing ALOT of IOUs) in order to diversify into other industries and even create new ones.

    Based upon the limited research and fact finding I have done so far, El Salvador to me seems to be on a growth trajectory if using GDP (Gross Domestic Product) as an indicator. If using GNP(gross national product) as an indictor which includes income from abroad (ex: the remittences), it looks even better. Also, in the current challenging economic climate, having coffee as a main commodity is also an advantage because people will drink coffee in good, bad and ugly times.

    All in all, the country seems to be in good shape, but yet what's up with the poverty level and the low wages?

    Are there laws to enforce minimum wage?

    Are there incentives for Salvadorans to save since there seems to be a low savings rate in the country?

    Taxes – fundings for social programs to get people out of poverty has to come from somewhere besides donations.

    Again, this is my (limited) view based upon what I read so far, and from outside looking in. I would love to hear insiders' viewpoints (Salvadorans & ExPats), as it would help us decide how to make a living there – be it starting a business or getting jobs – ala pimping ourselves one way or another ;)

    • Nanelle Says:

      I had been under the impression it was around $250/ mo, but to be close to accurate I looked online and according to consortiom centro america abigados, (www.latincounsel.com), in an article posted 05-17-2011, "the National Board of Minimum Wage, agreed to raise eight percent the minimum wage, the decree project its in the executive branch for approval, when said project enters into force the new minimum wages in the agriculture sector will be $104.97; in the commerce sector $224.29; industrial sector; $219.40 and the Textile Maquila $187.68." As far as enforcement I don't know. I do think a don't see how anyone could fail to hand over the FULL $187.68/mo to the maquila worker.

      I do not know about the lack of savings (lack of resources to spare?). I would go way out on a limb to say it could grow out of lack of a hope for something good to come of it. It takes either a huge burning dream (prize at the end) or a well ingrained behavior (training, which is basically past experiences which yielded small rewards of some kind) to sacrifice now, for a reward or security later? "Someone" told me, that wars, and either loosing everything, or seeing others loose everything repeatedly, has put a damper on long term planning. "Someone" told me the future is really not something people feel they can control (by their actions now). Aggressive hope is not common. OK I got that "someone" was a drunk friend. But it sounded good at the time? I bet Salvadoran readers know better.

      I do agree that El Salvador is on the grow, though I get confused sometimes about what the GPD says in concrete terms, and same with the GNP. The farther removed actual physical "stuff" produced the more often I have to stop, argue with myself for a while and decide slowly what it means. One of my brothers messed me up years ago with his boasts that he could make numbers say literally ANYTHING he wanted. Darned big brothers.

      And coffee! I LOVE IT! It is made here, by people here, and exported for ever increasing dollars per pound, and a pretty good percentage of the money it brings in goes back to the region that generated it. I also love that it is one of the areas where El Salvador is valued for awesomeness, not for cheapness. "El Salvador" brings an expectation of something good, and an appropriately higher price. LOVE!

      On taxes I "think" that businesses pay 25% tax of net profits on a monthly basis, capitol gains is 10%, VAT is 13%, and I think income tax is 25% at the very highest range. The papers talk of underfunded programs, poorly supported hospitals and schools, and of lack of funds for infrastructure. Like you, I would like to hear from Salvadorans and longer term (or better educated) expats about the matters you brought up!

  9. Diana Says:

    This old lady has decided that my life based on money is not worth the effort. I have been broke and been well off. I am now living in poverty within being well off financially because we are old and afraid to spend our hard earned and saved money because our government and country (The USA) is falling apart in a way never seen before.

    Do El Salvadorians use credit? Are there credit cards? Is there a debt ratio thingy there? Americans have used credit so much we are in deep do-do.

    If this country works in cash only and credit, they might be better off in the long run than any other country.

    • Nanelle Says:

      Wow, Diana! Thanks for bringing that up, and for pointing out some things that are the same in America. The credit situation here is a little frightening to me. 45% APR is common. I understand that credit card debt here is not as pandemic as in the USA, but that it is increasing. The interest rates are mind blowing. An interesting "trap" I see is that when making purchases I see signs that advertise "20% discount for paying with your visa". OUCH! Not cool. If they can pay for a 20% of the product, that speaks volumes. But with 40-50% annual interest, income levels unlikely to recover from much debt, and a constant media blast of how badly we need that item, it a scheme that is sure to succeed. What ever happened to the CASH discount? you are supposed to get a discount for CASH!!!

      • Rodrigo Says:

        There's a bank that targets workers pf the informal economy that charges 198% APR for short-term credits. No payment slip, nor payment guarantor required.

        http://www.ssf.gob.sv/descargas/tasas_int/tasas_0

        I miss cash discounts too. A couple of years ago I was able to get them at stores, but now I get a big "NO" and a Why-are-you-asking-this face as an answer.

        Many discounts have moved to discount cards owners only, some of them are free, but now I have to carry keychain full of cards when I go out. It looks like this:

        http://lifehacker.com/234306/organize-your-reward

        • Nanelle Says:

          I have been offered a couple cash discounts at little stores, who probably don't like the fees the card companies charge them, but I keep seeing the "discount for credit card" ads. It makes me mad, in part because I only just payed off a bunch of debt, and I am easily tempted! Thanks for the informative links too.

  10. Diana Says:

    One more recent thing this old woman has learned is that all those years we gave up going on vacations, going without, didn't play and laugh and put off making love and just 'being' with each other…..all those years have not resulted in what we thought it would. Oh we have the resources now. But we can't use them because now prices of health care and living is going up so high and we don't know how long our money now has to last nor how long our government will last….so we sit here in our 'golden years' living the same way we lived all those years of planning for our future while not having our "NOW" quality.

    So I figure if we had just stood still and lived/loved life and people to the fullest…and just put away 10% each month, we would be in an even stronger position in our old age than we are now.

    Plus we would have some great memories of all-those-years of laughing and loving. No matter what your plans are they are always based on the now you are living. And I tell you from experience, that now of yours will absolutely not stay the same long enough for your plan to work the way you want. As the years go by, circumstances change so much as to make such elaborate financial plans sorta silly.

    I taint bitter, just surprized. And regret not laughing more when I had the chance. Of course I do have a wonderfully strong portfolio. Somewhere……

  11. Patrick Says:

    Savings is a vital component to economic independence. But it also can be override by cultural/behavioral/philosophical bend. It is common knowledge that most Americans spend more than they earn BY CHOICE. As for Salvadorans, that may or may not be the case. Any shift to encourage savings on the national level has to come from policy makers.

    On a separate note, I am glad to see social capitalism in the form of microfinancing taking root in El Salvador. Hopefully, it can grow a few local entreprises and put people to work at higher wages. Helping a local entreprise grow to its full potential would be an ideal job for me be it as an independent consultant or working for someone else. I better start nagging my wife to teach me Spanish!

  12. Jane Says:

    Another phenomenon I notice – the over surplus of employees in all the retail stores! So many workers just standing around with nothing to do in desolate stores! The majority of people we know living in El Sal just barely get by – and that is with remittances from U.S. and Canada. The families cram together in little houses to make ends meet and ever other house seems to have a little tienda selling their wares. The only people we know that live in Santa Elena are financial consultants that own their own business (and are U.S. ex-pats) – even El Salvadoran lawyers that we know earn about 40K a year in El Sal. We opened a Hair salon business & food cafe in a beach community and it was a struggle because services and prepared food (like comedor places) prices are so low. Hair cuts down the road from us were $5.00 a head. Full, delicious meals are $3.00 (including drinks!). The retail rent was comparable to Canadian rates and the supplies as well are comparable so the net profit is quite small. Overall, we found it very difficult to live a comfortable life in El Salvador, which is too bad. The minimum wage needs to be increased and labour laws need to be introduced.

    • Nanelle Says:

      Jane, You are so right. In fact my husband rants about that same thing! Some businesses could cut staffing in half, but double everyone's pay, and do much better IMO. I will be feeling your pain as we start doing business here! Are you still running your beach business?

  13. Rodrigo Says:

    There's one store in a shopping center in El Salvador that sells $300 shirts, whose existence defies any logic. But well, some theories exist that explain the existence of this:

    a) A significant part of the Salvadoran money moves through the informal economy. The on-the-bus salesman, the owner of your street's "tienda", the NGO workers that sell donations, the pupusería, as a whole any transaction that does not use invoices in all or some transactions (from the pupusería, electricians, lawyers even doctors).

    b) It's likely that those stores with expensive items are owned by the same people who own cheaper more successful businesses.

    For example, Mr. Shopping Mall Owner fills un-rented space with classy stores so his shopping center looks posh.

    Or Mr. Successful Businessman that decides to open a fancy clothing store so his child who doesn't want to work has something to do. Now his child has something to do, and their friends don't have to travel to Miami to buy that brand. A win win situation for them.

    Or Mrs. Restaurant Owner has 25 successful restaurants that subsidize a couple of upscale places in a trendy street.

    c) One Latin American economics graduate told me once that the trade imbalance (more imports than exports) is turns the other way with substance-trafficking money (which isn't included in statistics) .

    d) And there are the University students, that work in call centers that earn $400 to $1000 and still young enough to live with their parents.

    • Nanelle Says:

      Those are good explanations. Maybe there is some from each category. I guess the economics of a store do change if you own the mall property!

    • Patrick Says:

      Rodrigo, thank you for this kind of "street" data that's more informative (to me) than published data (which tend to be biased to appease policy makers).

      Your comment made me think about these few questions:

      1. Do Salvadorans earn more income from the informal economy than wages?

      2. As for substance-trafficking, is it narcotics, consumer goods (ex: cigarettes, etc. ) or luxury goods (gucci, jimmy choo shoes, fendi, etc)?

      3. The University students whom live at home with their parents, do they help pay rent and household expenses? do they save in hope of buying their own house?

      4. I don't understand the logic behind the shopping mall owner – is he giving the tennant the space for free? or is he's filling it up himself? Either way, it sounds like taking on more losses that you have to.

  14. Jennifer Says:

    I am by no means a financial expert and am only speaking from what I have learned in my 2+ years here. Even though there are minimum wage requirements on the books, no one is going to complain, they are happy to have a job. Most salvadoreans here work like they used to back in the US. Off the books. No government agency is tracking small businesses they are free to do what ever they want. Shoot, I run a tienda out of the front of my house. I have no permit and pay no taxes. Nobody cares. As for savings most people I come in contact with live hand to mouth. They will come today for .25 cents in eggs (2) and .25 cents of pan frances and tomorrow will come again for the same thing. They do not plan for the next day, let alone next year. And I am sorry, I have read all the statistics I think they are misleading. I believe that a lot more households than they admit rely on money sent from the US to survive. And as the US economy fails, what happens to those families. The Salvadorean government does not hand out welfare and food stamps. You are lucky if they run electricity to your home. So what is happening to these people? Again I stress, I am not a financial expert and I do think that El Salvadors economic structure varies greatly from region to region. We live well on the other side of the country, close to Honduras. Here are some wages that I have come across

    Day loborer (working the fields, cutting corn, tending cows etc.) $6.00 a day.

    Kitchen cook $200 monthly (female) $300 monthly (male)

    Construction worker $12 to $15 a day depending on their skill level

    Vigilante (armed guard) $180 monthly

    Police officer to start $250 monthly

    So I have to wonder if not for remesas how would these people survive?

    • Nanelle Says:

      Jennifer, Thank you for those numbers. The informal economy is clearly very important, and can´t be measured. Well….i suppose it could, but that´s not going to happen.

      I´m not sure about paying Cops $250/ mo and then expecting them to do something about the Zetas. Why get shot at when you can cook, or either take bribes or do nothing? Solving problems is alot of work! It seems like a set-up for not getting it right.

      I wonder if solid arguments for enforced labor standards would be met with the argument that it would destroy the economy? (Oh wait….no I don´t. It would). That concentrating wealth tightly is actually much more damaging than putting a little pressure on certain businesses, is not an argument that goes over well somehow with the working class, who just don´t want to loose whatever job they currently have. I can understand that.

      I don´t know how some people would survive without remesas. It seems like a necessary evil. I guarantee in the same shoes I would get my sons to the US to work and support the family. IMO the remesas distort everything and make bad behavior on the part of businesses sustainable….but that doesn´t mean much at dinner time.

  15. Rodrigo Says:

    1. They do, if compared to what they could earn in a maquila or a commerce minimum wage.

    http://www.uca.edu.sv/virtual/comunica/archivo/mahttp://www.uca.edu.sv/virtual/comunica/archivo/nohttp://mediolleno.com.sv/salvadoreno-del-mes/2890

    2. Narcotics mainly. But there's also cheese and milk derived products from Honduras and Naragua, imitation clothes perhaps (Not Gucci, but others like Lacoste, Tommy …)

    3. I guess it varies from case to case as it depends on a combination of parenting styles and/or the family economics.

    About housing, I'd have to ask them.

    Btw, El Salvador has a government administered organization called Fondo Social para la Vivienda that house loans (up to $50 K for new houses, or $75 K for old houses) to workers of the formal sector. Even a minimum wage earning family can buy their own home through this program. So, the government lends, and the private companies builds the houses. (Though, the gov't has started to build houses again).

    Those projects aren't advertised on the pages of glossy magazines, but they are big scale, I've seen them run advertisements on Canal 2's popular Domingo Para Todos show.

    This could be a big disadvantage on working informally, not being able to access this loans.

    4. Filling it up themselves. I guess rent is less of a problem for those who own the shopping center they are renting.

    Oh, and I forgot to mention another possible reason: Government employees earn (much) better.

    • Nanelle Says:

      Rodrigo, Thank you for those articles. For the english speaking readers, it is worth the extra work translating, to read as many local publications as come your way.

      I personally cannot imagine paying a mortgage on a $50k loan, with two minimum wage incomes. Then again, I am thinking like an American and forgetting about the side income that it seems many families bring in. I have been learning over the past months, that even with limited or unlikely resources, tools or supplies, Salvadorans just get it done. Having seen some borderline impossible tasks accomplished seemingly by sheer force of will, I am learning alot.

    • Patrick Says:

      First of all, I want to say that the dialogues on this thread has been awesome and very helpful! My brain (with the little brain cells it has left) have been coming up with more questions than answers on making a comfortable living in El Salvador when we move there.

      On taxes: I suspected that taxes collected by the government is being spent more elsewhere (ex: government employees ala the "who you know" circle) and less on economic/social infrastructure (ex: schools, hospitals, etc).

      On Narcotics: Can the imports be a temporary stop so that it can be re-packaged before exporting to it's final destination? I can't think of the average Salvadorans having the extra money to support a drug habit. Then again, it's possible for some people if their other "jobs" provide substantially more income.

      On Tienda: Where do the Tiena owners get money to buy goods to sell? or make goods to sell? Also, what's the profit margin and volume of sales like?

      Overall, it seems to me that Salvadorans have the (serial) entrepreneurial spirit be it by circumstance or by choice (to some). With this type of energy in play, it can only lead to a better quality of life eventually.

      • Rodrigo Says:

        Government purchases and contracting were one of the main loopholes, now the process is more democratic by using using licitaciones (I believe that's called 'Tender' in English).

        There are still workaraounds though. A government office may publish an ad to "purchase 50 japanese cars, provided by a company established at least 30 years ago", and then you realize there's only one company that satisfies the requirements and you start to think "Was this agreed beforehand?".

        Another loophole occurs when the government rents (instead of buying) office space to host government offices. Renting property to the gov't is profitable.

        The governement spends in salaries that are higher than the average wage here. I agree on rewarding them with higher wages when they are among the top of their fields, but those that are inefficient or do nothing are also protected by strong labor unions. I once visited a government office (it will remain unnamed) that had students doing their work for free, meanwhile the 'workers' just pretended to work most of the time… With a few exceptions, my experience when dealing with government offices has been positive. Smiling to them and acting optmistic helps a lot.

        The gov't spends on infrastructure, but it gets neglected and lasts less time than private businesses. A private bank can have it's offices on a 60-year-old house and it will look perfect, trust the government on keeping a property for 60 years and it will be falling apart.

        Narcotics: There was an interesting article about that on the local El Faro online newspaper, LA Times mentioned it in this article:

        http://articles.latimes.com/2011/mar/22/world/la-

        Tiendas have a significant margin on products they sell, because products are sold an a one-by-one basis and on small purchases. The purchases are small enough that the margin becomes barely noticable to the purchaser, but add-up to the store owner. If I go to a tienda, I rarely spend more than two dollars, but it's definitely more convenient than going to the supermarket, even if I pay $0.60 for the $0.35 Coca Cola, or $0.25 for the $0.10 mini chocolate bar.

        Plus no rent or salary expensses. The products are delivered to them, so no transporting expenses either. Their signs are paid by the big brands (Tigo, Pilsener, Brahva). Their fridges lent by Pepsi or Coca Cola.

        I'm not sure how much money it would be required to open a tienda, but definitely it's an amount that can be obtained through microfinancing.

  16. Jennifer Says:

    I can only speak for a tienda owner since I run one out of my house. I opened it in January with $1000. That is a good amount of money to start a medium sized store. The profit margin is about 20 percent. But since most items are priced under a dollar, well, you do the math. Some examples

    2.5 liter bottle of coke I pay $1.27 sells for $1.50

    dulces .01 cent sells for .02

    Chips .08 sells for .10

    Fresh bread $1.00 for 12 peices sells 2 for .25 profit .25 cents on the dollar

    Bar of soap I pay .72 cents sells for .80

    If you are diligent (which I am) you can keep the store going solely on its profits. Since my inicial investment I have been able to take back $250 plus the store pays 1/3 of our electric bill. And I still maintain an inventory of over $1000. Admittedly I do have to loan it some money from time to time but am always able to pay myself back within a few days. But remember, this is in my home. I do not pay rent nor do I pay any employees. And where I profit the most is in the fact that my store buys most of my household supplies. Need some rice? I just go out front and grab some. If you have a good location and don't mind being stuck at home most of the time than I recommend this a good source of making a little extra money.

    • Nanelle Says:

      You know whats kinda interesting is to compare the economics of your tienda is to our coffee roasting company. I did not take a salary, and worked both my full time job, and at the shop (tired but still dreaming). My husband who was devoted totally to coffee, earned what other managers did, less than some, (except with the debt burden all in his name etc,so he really earned less). We even lived in the building with our business for while. Your business might actually be better than our multi-location beast, after paying rent, living at Bay Area expense levels, and paying thirty odd employees. I think we ended up with the same level of income from our business as you do, Adjusted to the difference in our location´s prevailing wages and housing costs. We just had a bigger scale, and a heluva lot of every kind expense.

      I have to admit that we ran the shop more like a vision than a business. We insisted on doing things the way we thought they should be done, rather than the way that made sense, All that stuff I seemed to be complaining about just now was kinda by choice. A little tienda is starting to look like it´s not so bad if you live where that model can work.

      One thing I have not gotten used to is the house/business combo. My neighbor has a sign that translates "we sell natural fruit popsicle´s". It sounds delicious. Im just not ready to go knock on his door yet. Yes, I am refusing to let go of some Americanisms this week. The sign clearly states he sells delicious popsicles, and it´s hot out. Here´s an invitation to knock on the door. But the door is closed and to an American that means the store is closed too. One more week.

    • Patrick Says:

      On Government & Taxes: Personally, being a believer of free market & free enterprise, I am not a fan of big fat government & legal monopolies that are disguised as big (fat) companies whom provide financial support to ALL the policy makers to insure they are protected regardless of who is in power. As you know, the bidding/tendering process can be manipulated (ex: agreed on the outcome beforehand) if there’s enough money thrown into it. As people catch on, I think the process will probably be more equal such as including local enterprises that have proven track record to do the project being bid/tender on. Generally speaking, is it fair to assume that the average Salvadoran “effective tax rate” is less than what’s being published because they get so much more unreported income than wages?

      Tienda: I am liking this more and more! Again, I must shamefully admit that I have more questions:

      What’s preventing anybody to start up a Tienda? Is it mainly money or something else like not enough space, not enough foot traffic, can’t get suppliers to deliver the goods, etc?

      Are there a lot of Tienda (ex: one on every corner of every block)?

      What’s the sales volume like? For example, Jennifer – how many days does it take to sell $1000 worth of goods? Also Jennifer, the individual item profit margin you have is freakin’ amazing!

      Is there an association for Tienda owners where they can exchange ideas on best practices to improve/grow their business? (ex: increase sales volume by giving a discount when the total purchase is over a certain dollar value, increase in-store foot traffic by posting flyers around the neighborhood with a tear-off coupon offering a (low cost) gift when they buy over a certain dollar value, loyalty program – when cumulative purchases reach a certain dollar level, they get a discount on their next purchase)

      Is it fair to assume that most Tienda sell mainly food products? Or do they sell other consumer items like pre-paid phone cards, over the counter medicine like aspirin, etc?

      I would be very surprised if microfinancing firms are not involved helping local Salvadorans launch Tienda or whatever opportunities that are aligned with the locals’ natural strengths to progress toward economic/social improvements. To me, this seems like an amazing opportunity!

      • Nanelle Says:

        This is just my guess, the small informal tiendas do well, and are not the focus of government intervention in part because they are small, out of the way and don´t bother anybody. Think in terms of the conflict between the mayor of San Salavdor and the vendors in t ecenter of the city. The mayor probably has permitted, rent paying businesses breathing down his neck, and "location-marketing" guy telling him they make the city look messy. The government isn´t equipt to do code enforcement outside of serious motivation to do so, in my opinion. I also think there is a cultural acceptance of letting a guy make a buck. (as long as it doesn´t get in my way). If you look like you make enough to pay taxes…..I bet they will come knocking.
        For my part, if we get up and running I´m going fully legal and permitted because i will be in the city and don´t want too many vulnerable spots if we make any other companies nervous. Which I don´t think we will…because there are no other ones….and actually in our market having a few of the same helps market the whole idea and everyone benefits. but just in case.

        • Patrick Says:

          Nanelle, you're looking to create a new market(btw, I think it's fantastic!) where as Tienda is an established "industry". So it makes sense for you to legal proof every steps of your operation, and triple dot all the "i"s & cross all the "t"s.

          I agree that Tiendas operators are under the radar of the government. Like you stated, they're not hurting anybody (except for being an eye-sore to some by appearing to be disorderly). You hit the nail on the head with your comment about when Tienda owners look like they can pay taxes, the government is going to ask for its share. By the time Tiendas owners look like they can pay taxes, they're probably living above poverty level (and that's the goal), and probably can pay taxes. Whether or not a person is willing to pay taxes when they can afford to – that's a separate topic.

          Personally, I believe every citizen should pay their fair share of taxes – no more, no less – because a government can not function without tax revenue, and a society can't grow without some tax revenue directly/indirectly(corporate/individual charities) flowing to the arts, science & education. Sorry, I digress…

          • Nanelle Says:

            To be honest I don´t mind taxes either. For the same reasons. I love good roads, good schools, good hospitals, and the arts, and I am willing to pay for them. I totally agree with you!

  17. Jane Says:

    Patrick: Unfortunately we know "average" El Salvadorans who earn about $300.00 per month and can still afford to purchase cocaine/marijuana and crack – reason being – the street drugs are very cheap.

    Nanelle: No, we no longer have our beach business. We have recently sorted out our Immigration mess and replanted back again as a family in "the land of milk and honey", Canada, where there is no financial struggling and many financial programs available to new Immigrants to acquire real estate etc. The major problem with our business was that we were a high quaility salon and our competitors down the road willing to do hair for $3.00 to $5.00 – hard to compete with those prices! We also have a friend/colleague in Escalon who have a Salon – but major problem there are the "bribes" that she is required to pay the gangs in order to keep her business from being a target – so that additional expense has made her re-think the business that she has had for many years and she is trying to get out now as well.

    • Nanelle Says:

      Jane, I am very interested in your comment because you mentioned competing based on quality and getting crushed by price. And you mentioned bribes. Both matters that concern me. What is a typical bribe, and how is it introduced? I know nothing about it. But I want to….i mean I don´t want to really know. Were you ever the victim of extortion? Im sad to hear what you say about trouble in competing based on quality. I hope that situation changes.

    • jose Says:

      u racist! just because they r hispanic dat doesnt mean they do cocaine, marijuana nd crack! u shouldnt say anything!

  18. Jennifer Says:

    Nanelle does your neighbors sign read Se Vende Charamusca? If so then I have the same sign on my door. You should definitely give them a try. Especially if they are natural. Don't expect something that looks like a popsicle, it is more like a ball of frozen juice and very refreshing. Look for flavors like banano con leche, horchata and even fresa. I promise you won't regret it.

    Patrick there are tiendas all over the place so location means everything. I am lucky that I live close to a molino so there is tons of foot traffic going past my house every day. But for every 2 people that stop 10 more choose to go others that are scattered around. I am also on the main road going into Gotera so I get the truck drivers and tourists coming out. Sales volume varies but on average I make $35 a day. I have made as much as $90 (and with most items costing less than a dollar you can imagine the amount of running I did that day) and in the beginnig I was making as little as $5 daily. Being a Gringa I think at first people where leery to stop at my door, but I have been in customer service all my life so I know that if you are always polite, smiling and fair you will build business. So if I do the math it would take about 4 weeks to sell my $1000 inventory, but it really doesn't work that way. While I have to constantly replenish my fresh bread, soda and chips, There are other items that I replenish monthly and even more that I still haven't had to yet. And local tiendas sell anything. If you ask me for something that I do not have, chances are I will have it next week. But again, it depends on your location. I don't sell phone cards because my neighbor sells saldo but I do sell chicken food because so many of my neighbors have asked me for it. You really have to take your time and learn what your particular needs will be. For me it is worth it.

  19. Jennifer Says:

    Patrick, all this talk about my store made me decide to blog about it. Here's the link if you are interested
    http://rubireyes-lifeinthearmpit.blogspot.com/

    • Nanelle Says:

      Jennifer, I love the name of your blog!

    • Nanelle Says:

      I love it. Feel free to post links to your articles on our facebook too. We need more info at hand

    • Patrick Says:

      Jennifer, thank you for the "no holds barred" views of your transition as well as your family's. Very powerful!

      Now, I feel left out. It seems like everybody's got a blog about El Salvador except me. Even my wife started a blog about our (multi-year) "prep" (http://expatprep.blogspot.com/). She's been insisting I write something on it, but I keep telling her that I am still learning about El Salvador from you folks, and therefore, have very little to add. I better come up wit something soon before she blogs me over the head!

  20. Jennifer Says:

    Yeah Nanelle, I was kind of in a bad place when I named that blog. Luckily I am out of the bad place but felt the name could stay.

    • Jeanie Says:

      Thanks so much for this blog, Nanelle! I find this conversation fascinating being a small business owner (coffee shop!) in the La Libertad area on the beach. My husband and I are from Jersey and landed here after surf vacations that increasingly became longer each time. I used to have an expat blog as well until I received an extortion call to my home (though I believe it was a cold call) and I became a bit uncomfortable being "recognized" by strangers. After 5 years of living in El Salvador, building a dream home, opening one business, opening and closing another business, having 3 children we've decided to throw in the towel. I feel sad that we've come to this point because the things I loved about the country still remain, but after having 3 kids things have just become more difficult. There are multiple reasons for our decision, but as far as economics is concerned, we have not been able to save one penny here. In fact, all the money we brought has been invested into this country! Our coffee shop does ok (but we split 50% with a silent partner instead of rent) and my husband is a science teacher but after the cost of food, car repairs (and there are a LOT), gas, electricity, internet and help with the kids…there is nothing left. We don't buy clothes here ever, and we RARELY go out. So…I don't know. I do have a little bit of advice for anyone thinking about moving here. Get a GOOD lawyer. That's not to scare anyone, but it will save you in so many ways (with regards to residency, opening a business, procuring land etc). p.s. Hey Jane!

      • Nanelle Says:

        Jeannie, Thank you for that comment. I think it is an important read, especially for anyone making a decision. It sounds like you love El Salvador but are exhausted. I have to say that with three kids, and five years into massive investment in building a beach home and business, I'd be shocked if you saved up any money or got out of the house, no matter where you are! I have three kids too, two are grown, so just my one little girl keeps me from having a beer with any of the people I very much want to meet. I'm in the same spot.
        On the business side, and having run a business I know the feeling of wanting to escape!
        I guess my point is, I left the US for all the same reasons (aside from the extortion). I was making good money, working in a good job, but living in a tiny box and suffocated by debt, upside down every month. Sometimes no matter where you are, you cannot get ahead!
        I don't buy many clothes here either, in part due to price, but also because I am tall and have huge feet, so anything I want is at least one size too small.
        On another note, and if you don't mind, can you describe an extortion call? It is a strange request, but it's interesting for those who have never lived in El Salvador. Everyone has heard about extortion, but few have an idea of what it means really. They only know the mantra, "Don't live or do business in El Salvador, because of the extortion", Which they take to heart, but don't understand.

        "Hello President Funes….hire half the cops but pay them triple, so they are investigators instead of guards, and compensate for lack of visible patrol, in the short term, with the military, which you are already using, if you want to actually reduce crime to increase foreign investment). (Sorry, but I haven't yet broken my habit of trying to solve huge problems by blurting out unstudied, unfiltered opinion"

        I am sorry you are leaving, and hope things improve here enough for a safe return.

  21. joe Says:

    this is good but not right! i no someone who is ACTUALLY salvadoran nd him nd his family say it is not like dat it is better! that was before but now they gain more money than dat! u r american like all of us! u just moved to el salvador! that doesnt mean u no anything! ask someone who is really salvadoran!

  22. Kenneth Says:

    funny but it seems like anyone wanting to wash my clothes is charging at a rate of $4 – $9 per hour and they typically want to wash my clothes after they´ve washed and hung out to dry their own; meaning my clothes may go damp over night and require rewash to remove the odor they´ll then acquire. glad to have a washing and drying machine now. just had a tile counter put in. arrived back from mexico to find my front door wide open. the kitchen counter tile wasn´t sealed and it all absorbs water. some tile were not grouted but there was plenty of grout in the toilet. the paint that was purchased by my landlord for the wall was watered down by 30% and looks it. the painters walked away with 1/3rd of the paint. one of the painters arrived armed with a kitchen knife. how funny. how sad. i was a contractor in the Bay Area and it is all too common.

    • nanellenewbom Says:

      Kenneth that sounds awful! I think that we get an inflated price for many services based on the expectation that we have the money. By me I mean foreigners. The standing offer I get for laundry lately is $3.00. Now that I do my own laundry in the pila I consider it a good low price. It takes me a couple hours to get s good portion of the stuff on the line (if I want them clean as opposed to rinsed). On the paint and construction thing, I have seen that too. You reminded me how badly I need to post about the recent string of repairs on the house I am renting, and the apparent belief that every man with a tool should be a skilled tradesman in any of several fields (and that it is not the case). (on the other hand I admire the determined effort of these guys, who will by no means turn down a job, or quit until they feel they have completed it to the best of their abilities) (the challenge is that a bay area contractor will have different ideas about what knowledge or tools are required to build a cabinet, or repair plumbing). I fell ya on the repairs issue. people have begun to feel im a very picky, pushy and tense lady when it comes to things actually working or not.

  23. felipe Says:

    I lived in ES for about 17 years. The thing about ES is that most od the people there ownt their houses so they dont have to worry about rent. Or if you rent they just rent a house directly from the owner as though they might be living in the US (my case) so the only thing they have to worry about is their expenses (electric bill, water, telephone food). I remember this one gov. employed who had minimum wage earned avout $300/month and he seemed to be doing pretty well. Besides the electric bill is really low and foos is cheaper than here (U.S). I believe that the problem is with people who do not own a home.

  24. Guest Says:

    "A professional job earns $400 a month and rent in low income portions of the city are $400 a month"

    Have you ever been east of El salvador del mundo?

  25. mburch Says:

    European Academy..?
    (that's where I started myself ;-)

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