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The National Minimum Wage Council of El Salvador unanimously approved the increase proposed by the President. The new minimum wage in El Salvador became effective in June 1, 2025.
On May 27, the Minister of Labor, Rolando Castro, publically announced the 12% increase to the wage. The proposal was initially made on April 25.
New minimum wage in El Salvador
The average minimum wage hadn’t been modified since 2021, staying at a US$365/month rate for nearly five years, as seen in the graph below.
(Source: Trading Economics)
With the recent increase, the minimum wage for the commerce, industry and service sectors go from $365 per month to $408.80, the agricultural sector from $243.50 to $272.72, and the machinery sector from $359.16 to $402.26, according to information previously provided by the Ministry when the increase was announced.
| Sector | Before | Now |
| Commerce, Industry, Services | $365 | $408.80 |
| Agriculture | $243.50 | $272.72 |
| Machinery | $359.16 | $402.26 |
What can change for companies hiring in El Salvador
For foreign companies hiring local employees in El Salvador, the updated minimum wage brings both legal and financial implications.
Legally, employers must immediately comply with the new wage standards effective June 1, 2025, to avoid penalties or labor disputes. Non-compliance could lead to sanctions by the Ministry of Labor, including fines, audits, or restrictions on future hiring.
Financially, the 12% increase in base wages will raise monthly labor costs across all major sectors. This may affect budgeting, particularly for small to mid-sized companies that operate on tight margins.
It can also impact the total cost of employment when factoring in statutory benefits like social security, vacation days, and severance obligations, which are calculated based on salary.
If your local employees are already payed above the minimum wage, the same increase is not obligatory. But it is suggested that the company be up to date with the reality of inflation and living cost wages to offer salaries and benefits that maintain employee retention.
For companies without a legal entity in El Salvador, these changes highlight the complexities of local employment laws. One way to navigate these shifts efficiently is by partnering with remote EOR services.
An employer of record (EOR) can hire employees on your behalf, ensuring full compliance with local labor laws, payroll regulations, and social contributions—even as wage policies change.
By working with an EOR, companies avoid the administrative burden of setting up a legal entity and stay agile in adapting to evolving labor standards. This solution is especially valuable in dynamic markets like El Salvador, where legal updates can occur with short notice and require prompt action.
