New higher minimum wage is not enough to cover a lower basic basket
The national cost of the average basic family basket in the Dominican Republic has increased by 6.5% in the past year, according to the Dominican Central Bank (BC). This means that the cost of the basket has gone up from RD$40,547 in January 2022 to RD$43,210 at the end of December 2022. In February 2023, the cost further increased to RD$43,531, indicating a 7.3% increase compared to the previous year. The lowest basket, or “quintile 1”, increased by 8.1%, meaning that Dominicans now have to seek RD$2,662 more to pay for this item, which went from RD$23,969 in January 2022 to RD$25,928 in February 2023.
Despite the increase in the minimum wage for some workers, such as those in large companies, they will still not be able to fully cover the lowest basket. A worker with the new highest minimum wage, which will be set at RD$24,150 as of April 1, 2023, will still lack RD$1,778 to cover the lowest basket. With the withholdings required by law, the worker will earn around RD$22,722, so they would have to look for more than RD$3,200 to be supplied from the lowest basket that the Dominican economy has.
The other quintiles of the basic basket have also increased in the last 14 months, ranging from a 6.4% increase in the “quintile 5” to an 8.1% increase in “quintile 1”.
It always is the case the increasing cost of consumer needs goes beyond any boost of wages to help catch up to the costs. Never observed any government anywhere fully investigate and explain the reasons of increasing costs. It is reasonable to expect vendors of goods and services to increase prices to compensate for mandated wage hikes. However, it seems their increases for the goods and services are out of sync with the wage hikes.
It isn’t just wage increases for workers here. Wages and expenses also go up for suppliers. Import fees and taxes also go up. That’s just a couple of categories that keep going up.