In all the discussion about setting a new minimum wage, with its focus on the proposals and counter-proposals of business and labor organizations, it can be easy to lose sight of what it costs urban workers to subsist in Honduras. The Honduran government has defined this as the cost of the canasta basica alimenticia, a monthly supply of 32 basic products that feeds a family of six.
In 2008, Honduras' labor minister said the cost of the canasta basica was 6,800 lempiras ($360 US). The minimum wage then was just half that amount.
Rampant speculation in 2008 was driving up the cost of beans. When the minimum wage was last set, Honduras had the most expensive canasta basica in all of Central America.
When he set a new minimum wage in December 2008, Manuel Zelaya explicitly placed it at 500 lempiras less than what it would cost a worker to buy the components of the canasta basica at that time.
Yet the claim being made today is that the canasta basica costs a fraction of its 2008 price, a claim that if true, would justify (in some measure) a lower minimum wage. How is this estimate being produced?
COHEP says the canasta basica cost is about 4,400 lempiras per month, basing their estimate on pricing the goods at the Tegucigalpa government-subsidized supermarket called Banasupro and the wholesale market in Tegucigalpa. This is well under the current minimum wage of 5,500 lempiras.
The workers unions, in contrast, suggest the canasta basica costs about 6,300 lempiras a month in the stores where their employees actually typically shop. The difference between the two sides comes to about $100 (US) a month.
The Instituto Nacional de Estadistica (INE) calculates the prices of the constituents of the canasta basica in a quite different manner from that used by COHEP. INE collects prices from six retail markets in a specific city, for a given week, as well as in seven supermarkets, 46 pulperias and two farmer's markets in the same city, and for each category calculates an average price. These four averages are then averaged to get a price for a given item in the canasta basica. You can find the weekly price reports for 2006 to 2008 for several cities on the INE's website here.
The Banco Central de Honduras then use these prices and applies them to a standard amount of each item sufficient to feed a family of six for a month, and calculates the cost of the canasta basica.
What COHEP did, in contrast, is go to a wholesale food market and to a government subsidized supermarket, a disingenuous selection of prices that systematically profoundly underestimates the real cost of the canasta basica.
Current INE estimates, and in fact, any of those for 2009-2010, are not available online. But one thing is clear: proposing a minimum wage based on low prices very few Hondurans will actually be able to obtain would make the minimum wage something far different from a living wage.
La Prensa noted in August that, in general, prices have continued to increase throughout all of 2009 and 2010. Bean prices increased $0.80 a pound just in the month of August, largely due to speculation. Vegetable prices have increased rapidly as the persistent heavy rains damage field crops. To the extent that these prices are not reflected in neighboring Central American countries for the same commodities, and they are not, this indicates significant market price manipulation in Honduras.
When Porfirio Lobo Sosa was sworn in in January, 72 percent of Hondurans lived in households that didn't have access to even the canasta basica according to a European Union study, creating a serious food security problem for Honduras. That's 5.7 million people. A further 1.5 million Hondurans lived in households that earned enough to pay for the canasta basica every month, but not enough to afford housing, health care, transportation, education, etc. That leaves just 800,000 people in Honduras, according to the study, in households with incomes that adequately support them.
And that is what is at stake in the current negotiation, if we step back and think about how wages affect people's ability to survive.