Attribution-NonCommercial-NoDerivatives (CC-IGO BY-NC-ND 3.0 IGO) license (http://creativecommons.org/ licenses/by-nc-nd/3.0/igo/legalcode) and may be reproduced with attribution to the IDB and for any non-commercial purpose. No derivative work is allowed.Any dispute related to the use of the works of the IDB that cannot be settled amicably shall be submitted to arbitration pursuant to the UNCITRAL rules. The use of the IDB's name for any purpose other than for attribution, and the use of IDB's logo shall be subject to a separate written license agreement between the IDB and the user and is not authorized as part of this CC-IGO license. Note that link provided above includes additional terms and conditions of the licenseThe opinions expressed in this publication are those of the authors and do not necessarily refl ect the views of the Inter-American Development Bank, its Board of Directors, or the countries they represent. SECOND EDITIONThis edition includes some changes from the formatting of the fi rst edition. Changes in the calculation of non-wage costs have also been introduced, affecting Figures 2.6-2.10, 4.5, and 5.7. These changes are due to several adjustments that can be summarized as follows: 1. the inclusion of contributions to training institutions in Nicaragua and Paraguay; 2. changes in taxable income for the calculation of premiums (gross income in some cases and income net of the additional year-end bonus in others); 3. adjustments in the upper and lower thresholds for determining taxable income, which affect the calculation of the total contribution rate (as established by law, largely dependent on the minimum wage).Furthermore, specifi c adjustments were made for some countries. In Nicaragua, the advance notice penalty was eliminated, as it is not provided for in labor law, and in Jamaica, an adjustment was made in the working population obtained from the Labour Force Survey (which was employed to calculate the 2012 GDP per worker).In Figure 5.2, the indicator labeled "other special costs in the event of collective dismissals" for Nicaragua (Item 21 in the calculation of the "protection against collective dismissals of regular workers" indicator) was adjusted from 0 to 0.5. Finally, small changes were made in Figure 2.17, as in some countries, the rate refl ected the percentage of employees who received job training out of the total population (15-64 years old) rather than out of employees of the same age group. Jamaica was excluded from this Figure, since the survey only contains data for the inactive population.The Spanish acronym for youths who are neither in education nor working is "NINIs"; the usual English acronym refers to youths "not in education, employment, or training" (or "NEETs"). However, translating NINIs as NEETs would not be accurate, as the household surveys in Latin America and the Caribbean (LAC) do not capture whether people are enrolled in training institutions. Therefore, this book does not use the standard English acronym NEET. The same applies to youths who are "neith...

work is licensed under a Creative Commons IGO 3.0 AttributionNonCommercial-NoDerivatives (CC-IGO BY-NC-ND 3.0 IGO) license (http://creativecommons.org/licenses/by-nc-nd/3.0/igo/ legalcode) and may be reproduced with attribution to the IDB and for any non-commercial purpose. No derivative work is allowed.Any dispute related to the use of the works of the IDB that cannot be settled amicably shall be submitted to arbitration pursuant to the UNCITRAL rules. The use of the IDB's name for any purpose other than for attribution, and the use of IDB's logo shall be subject to a separate written license agreement between the IDB and the user and is not authorized as part of this CC-IGO license.Note that link provided above includes additional terms and conditions of the license. 2 AbstractThis paper presents new data documenting the cost of salaried labor in 20 Latin American and Caribbean countries. We gather data on the three main costs associated to hiring salaried labor; (i) minimum wages and other monetary benefits, (ii) mandated contributions for social insurance and other benefits and (iii) job security provisions. We present two new indicators. First, we calculate the average non-wage cost of salaried labor (NWC). This indicator answers the following question: for the average wage, what additional share of wages must be satisfied by workers and employers to fulfill all the law mandated non-wage costs of a legal salaried relationship. Our second indicator combines these non-wage costs with the nominal restriction that legal wages cannot be lower than the minimum wage. We calculate the annual dollar value of paying a worker the minimum wage plus all mandated non-wage costs as a share of GDP per worker. This constitutes the minimum cost of salaried labor (MCSL). We highlight seven important facts; (i) The average non-wage cost of salaried labor (NWC) for the region is 49% of wages.(ii) There is a large dispersion across countries like Argentina, Brazil and Peru with costs around 70% of wages and countries like Trinidad and Tobago, Jamaica and Chile with cost less than 40% of wages. (iii) Mandatory contributions are the most important component of the average non-wage cost of salaried labor with 27.3% of wages followed by additional benefits with 13.8% of wages while job security provisions account for another 8.4%. (iv) On average, mandated contributions from employers amount to 17.5% of average annual wages, versus 9.8% of mandated contributions from employees. (v) The minimum cost of salaried labor (MCSL) is on average 39% of GDP per worker.(vi) Variation of the MCSL across countries is even larger. For countries like Mexico, Trinidad and Tobago or the Dominican Republic the MCSL it is below 15% of GDP per worker while the minimum cost of hiring a salaried worker in Honduras is 95% of GDP per capita. (vii) Despite having below average NWC, the five poorest countries in our sample are those presenting the highest MCSL, due to high minimum wages relative to GDP per worker.

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