Many South and Central American markets pose challenges for global employers, such as limited skills availability, low productivity and more complex regulations. Despite these challenges, Chile has experienced significant improvement due to a substantial labor reform in recent years and maintains a spot in the top 5 markets in the Americas region.
Mexico remains an attractive global market for investment, due to proximity to North American markets such as the United States. Benefits of this proximity include logistical cost saving as well as cost savings benefits related to skills. However, a higher than the regional average employment tax figure may be cause for closer evaluation of the market especially in certain sectors that could be subject to additional taxation or import tariffs.
Top 5 Markets in the Americas Region
Average wage, though a great tool comparison, is predominantly driven by the ratio of highly skilled jobs to lower skilled jobs. Markets with a higher volume of highly skilled jobs will average higher wages than markets with a high volume of low skilled jobs. Therefore, not all markets with lowest wage are the lowest for rates for a given skill.
Manufacturing wages are a leading indicator of rising costs as they typically rise before the wages of professional skills. Manufacturing wages are particularly sensitive to inflation and statutory burdens. Therefore, though the cost of manufacturing skills may be much lower than more highly skilled jobs, they are generally the first to reflect the rising cost of wages in a market. Due to increased digitization and automation, some markets are showing higher wage increases than others. Specifically, those driven by other industry products such as automotive and pharmaceutical.
Employment tax is a basic statutory burden that employers need to add to wages when calculating the cost of skills in a workforce market. It is typically the first metric of consideration beyond the wages themselves. Wages largest component of total labor cost. However, taxes are the best indicator for total cost. They are also more representative of the labor cost per market than insurance as insurance appears more standardized, while taxes are unique to each market.
For more information, interactive charts and to download the full Total Workforce Index™ visit the Total Workforce Index™ microsite from the link below.