El Salvador

Population

El Salvador has a population of approximately 6.5 million people (as of 2023). It is the smallest and most densely populated country in Central America. The majority of the population is mestizo, a mix of indigenous and European descent.

Capital

The capital of El Salvador is San Salvador, the largest city in the country. San Salvador is the economic, political, and cultural hub of the nation and features many historical and modern landmarks.

Economic Power

El Salvador’s economy is based on services, agriculture, manufacturing, and increasingly on remittances (money sent home by Salvadorans living abroad). The US Dollar and, more recently, Bitcoin are official currencies, which enhances the country’s stability in international markets.
The Gross Domestic Product (GDP) of El Salvador is around 29 billion USD (2022). Key exports include coffee, sugar, textiles, and there is a growing manufacturing sector. El Salvador has also invested heavily in the technology sector, especially regarding cryptocurrencies.

Culture

El Salvador’s culture is heavily influenced by Spanish and indigenous traditions. Spanish is the official language, and religion plays an important role, with the majority of the population being Roman Catholic. Popular music styles include Cumbia, Punta, and Salsa. El Salvador celebrates several annual festivals, including Independence Day on September 15 and Fiestas Agostinas in August. Traditional Salvadoran dishes like Pupusas are a central part of the culture.

Currency

The official currency of El Salvador has been the US Dollar (USD) since 2001. Since 2021, Bitcoin has also been a legal currency in the country, making El Salvador the first country in the world to recognize cryptocurrency as legal tender.

Health Insurance and Social Security System

El Salvador’s social security system is managed by the Instituto Salvadoreño del Seguro Social (ISSS). Both employers and employees are required to contribute to this system, which provides coverage in areas such as health insurance, maternity benefits, accident insurance, as well as retirement and disability pensions. Contributions are as follows:

• Employers contribute about 7.5% of gross salary to health and pension insurance.
• Employees contribute about 3% of their salary.

Employer Costs

In addition to social security contributions, employers are also responsible for costs related to accident insurance and pension contributions. In total, employer costs amount to approximately 15-17% of an employee’s gross salary.

Salary and Bonuses

El Salvador has a legal minimum wage, which varies depending on the sector. In industry, the minimum wage is around 300 to 365 USD per month, while it is lower in agriculture and craftsmanship.
All employees are entitled to a 13th-month bonus, known as “Aguinaldo.” This must be paid between December 12 and December 20 and equals one additional month’s salary. The amount of the Aguinaldo depends on the length of employment.

Payroll

Employers are required to provide employees with a monthly pay statement detailing all deductions for taxes and social security contributions. Income tax is applied progressively, with higher incomes subject to higher tax rates.

Public Holidays

El Salvador has 10 public holidays, including:

• New Year’s Day (January 1)
• Labor Day (May 1)
• Independence Day (September 15)
• Christmas (December 25)

On these holidays, employees are entitled to paid time off. If they work on a public holiday, they typically receive double pay.

Working Hours

The standard working week in El Salvador is 44 hours, usually spread over 5 or 6 days. Overtime is paid at a rate of 50% above the regular hourly rate, and work on holidays or night shifts is compensated at a higher rate.

Vacation

Employees are entitled to a minimum of 15 days of paid vacation per year after one year of service. Employers must ensure that the vacation is taken and cannot compensate it with money, except in the case of termination or resignation.

Sick Leave

In the event of illness, the social security system (ISSS) provides sick pay if the illness lasts more than three days. The employer is required to continue paying the salary for the first three days of illness. After that, ISSS takes over and pays 60% of the employee’s regular salary until they recover.

Termination/Severance

Labor laws in El Salvador allow for employees to be dismissed without a valid reason, but employers are required to provide severance pay. This severance is equal to one month’s salary per year of service.
In the case of layoffs, a notice period of at least 30 days must be observed, unless the dismissal is due to a serious reason. In such cases, employees are still entitled to severance pay based on the length of their employment.

This information provides you with a comprehensive overview of the legal and economic conditions in El Salvador.