San José, Costa Rica, since 1956

Minimum Wages Not Keeping Up With Inflation

Minimum wages have increased in the last two years, but purchasing power has dropped, according to a new study released by the National University (UNA).

As a result, workers who are now earning more on a monthly basis are able to buy fewer necessities, such as food, due to the steady rise in inflation, according to a study carried out by UNA.

The report cites as an example a family that was earning ¢200,000 (about $364) per month in November 2006 today is earning ¢249,000. However, that same family is not able to buy as many things as two years ago.

The study also indicates that while minimum wages have increased by 24 percent during the past two years, purchasing power decreased by 28 percent.

The university used the cost of the basic food basket, which includes 45 different items, as an indicator. The total cost of items in that basket has increased in price 45 percent in the last two years.

Roxana Morales, social sciences faculty member at UNA, said that these types of indicators affect people from the lowest income-earning families.

“As a result, these families are buying lower-quality food and less quantity.”

The most basic food items whose prices have increased between October 2006 and October of this year include the following: yucca by 228 percent, wheat flour by 95.5 percent, pastas by 85.2 percent and rice by 64.26 percent, to name a few.

In addition, transportation and electricity prices have gone up 35 percent, Morales said. “As a result, there is insufficient income to maintain the same quality of life of two years ago.”


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