“People give me shoes and clothes to sell. Even if it’s only for two coras (25 cent coins), I sell them and then I eat,” says Lidia Ortez Ángel, who just turned 65 and lives in El Salvador, a country known for having dismantled the power of the two most feared gangs in Central America: Mara Salvatrucha and Barrio 18.
Lidia has never left Soyapango, the second most populous city in El Salvador, where she has lived her entire life, surviving on informal jobs or the charity of some of her neighbors.
“I went to see a lady for whom I washed and ironed. I haven’t done it for a year and a half because my bones are failing me… She just gave me a cup of rice pudding. With that, I’m not going to have lunch anymore,” she told the newspaper. Voice of America the morning of August 13th.
Lidia is not the only woman in El Salvador facing unemployment and difficult economic conditions. Just across the street from her house, Marina Navas, a slightly younger woman, lives in similar circumstances.
“There is no work, there is not enough money. Right now I have nothing, I have nothing to eat. The president has been good, he has sent us boxes of food, I appreciate that, but I would like him to send a little more,” says Navas.
Navas works as a nanny and earns $100 a month, a third of the country’s minimum wage of $365.
When Nayib Bukele took office as president of El Salvador in 2019, the main concern of Salvadorans was gang violence. However, current polls show that the economy, including unemployment and the high cost of living, has become the new big problem.
Bukele has responded by lowering tariffs on basic goods, setting up agricultural markets where food is sold at a lower price, and warning producers not to speculate on prices under threat of criminal prosecution. However, so far, these measures have had the opposite effect to the one intended.
According to the Central Reserve Bank of El Salvador, the price of food continues to be higher than that of other categories that make up the general index of products, and has maintained an upward trend over the last five months.
Between June and July 2024, Food prices in El Salvador increased by 0.9%Of the 12 products and services monitored, food and hotel and restaurant services have seen the largest increases.
Besides, the cost of the food basket In urban areas of El Salvador, the minimum wage has risen by 30.6%, from $202 in July 2021, when the last increase in the minimum wage occurred, to $264 in July 2024, according to data from the National Office of Statistics and Census (ONEC).
This means that what was previously purchased for $5 now costs almost double.
Luis Treminio, president of the Salvadoran Chamber of Small and Medium Agricultural Producers, explained to VOA that production in the last agricultural cycle in El Salvador has been the lowest in the last seven years. The causes include climate change, the increase and shortage of labor, the increase in the cost of renting land and agricultural inputs, as well as the lack of support from the last four governments to promote agriculture.
“It is worrying because, instead of betting on food sovereignty, we are moving away from it,” warns Treminio, pointing out that this dependence on the market makes El Salvador dependent on supplier prices.
Lidia Ortez, touching her cloth purse and turning it toward the floor to show that it is empty, says that sometimes people give her five dollars, but that life has become so expensive that it is almost impossible to buy meat and vegetables with that amount.
Nearly half of the population in El Salvador does not have access to formal employment with social benefits such as health and pension savings, according to the National Office of Statistics and Census (ONEC), which assesses the quality of life of citizens through its annual survey of “Multipurpose Households.”
In 2023, 42.5% of Salvadorans, like Lidia Ortez or Marina Navas, survived thanks to “underemployment”, that is, jobs without legal benefits and in precarious conditions.
“Underemployment is as serious, or even worse, than unemployment, since poor people, especially in developing countries where social safety nets are often limited, cannot afford to be unemployed and are therefore forced to engage in economic activities that are not very productive and provide little income,” warns the Foundation for the Development of Central America (FUDECEN) in a recent study.
Furthermore, those who have formal employment often face a minimum wage that does not guarantee a decent life.
Since 2021, the minimum wage in El Salvador has remained at $365 per month. According to the law, this must be reviewed at least every three years, taking into account the cost of living, which includes food, clothing, housing and education, among other factors.
Despite the fact that the basic basket of goods has increased by 30% since the last review, the government has not yet started discussions on a possible increase in the minimum wage.
The “Bukele” recipe
For the moment, Bukele has focused his efforts on other measures to alleviate the cost of living, such as the recent elimination of taxes on 160 basic products, including basic grains, vegetables, and meats, for a period of 10 years.
Although the recent measure was approved by 59 of the 60 legislators, an opposition party to the government suggests that the ideal would be to eliminate the Value Added Tax (VAT), which is 13%, to achieve a real impact on the basic basket. They argue that, since El Salvador already has Free Trade Agreements (FTA) in Central America, many products are already exempt from tariffs.
Other government measures have focused on encouraging foreign investment. The message about the change in public security in El Salvador has crossed borders, resulting in a tourism boom, reflected in a 36% increase between 2022 and 2023.
Real estate agents are already talking about accelerated development in the country’s coastal area, from the department of La Libertad to La Paz, where El Salvador’s Oscar Arnulfo Romero international airport is located.
Growing buyer interest, coupled with improved security, has led to a surge in property prices in El Salvador’s coastal zone, which could become another challenge for the government in the future.
“We have already fixed the most urgent issue, which was security. Now we are going to focus fully on the important problems, starting with the economy,” Bukele declared on June 1, when he received the presidential sash for the second time at the start of his second term.
However, the country faces a public debt of $30.173 billion, of which almost $11 billion has been accumulated during Bukele’s administration. This total debt is equivalent to 84% of El Salvador’s Gross Domestic Product (GDP).
Analysts agree that much of the Salvadoran economy is kept afloat by the $8 billion in remittances sent annually by Salvadorans living abroad.
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