El Salvador: minimum wage grows by 12%
As of June 1, 2025, an increase in the minimum wage is made, through a proposal sent to the National Minimum Wage Council from El Salvador. This represents an increase of 12% of the current salary, which according to the direct items would be as follows:
National context
This increase represents the first salary adjustment since August 2021, when a 20% increase was agreed. Salvadorian law indicates that the minimum wage must be reviewed at least every three years.
This increase could bring benefits such as an increase in the purchasing power of workers, especially those with lower incomes, as well as a possible stimulus for the local economy. However, it could also generate inflationary pressures and affect small and medium-sized enterprises.
What does this increase mean for companies?
The adjustment to the upside of the minimum wage will have a multiplier effect on personnel costs. This measure expands the costs of annual vacations, Christmas bonuses, holiday pay, as well as calculations for severance payments in case of dismissals. Employer contributions are boosted monthly, which translates into an augmentation of companies' costs and expenses.
Income tax exemption
In April 2025, the Legislative Assembly from El Salvador approved a proposal to extend the Income Tax exemption to all salaries of up to USD 550. The measure aims to help for a large part of the Salvadoran population. It is intended to generate better conditions in the quality of life of Salvadorans and increase their purchasing power, in addition to boosting the national economy. It is expected that this surplus will reach all businesses such as restaurants, markets, or stores.
Following this reform in El Salvador's tax system for payroll management, it is advisable to develop a correct administration of these processes. So, if you wish to contract payroll services adapted to your subsidiary in this country, or in any of the more than 50 jurisdictions where we operate, do not hesitate to contact us.
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All information contained in this publication is up to date on 2024. This content has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this chart without obtaining specific professional advice.No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this content, and, to the extent permitted by law, AUXADI does not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this chart or for any decision based on it.
