Hiring international employees can be an attractive option for growing companies. Countries like Bolivia offer more cost-effective skilled talent than the US and Canada as well as a range of other benefits.
While salaries are an important factor to consider, there are many other costs to keep in mind when it comes to global hiring. For example, employers are typically required to make mandatory contributions to social security. They may also provide staff with benefits like healthcare when competing for top talent.
This article will walk you through the various fixed and variable costs of hiring in Bolivia.
Costs to Consider When Hiring Around the World
The basic hiring costs in Bolivia include:
- Employee’s gross salary
- Taxes and benefits
- Thirteenth and sometimes fourteenth-month salaries
- Vacation pay and other leaves
- Overtime pay
- Severance pay
Plus, you may want to add certain optional costs like benefits, bonuses, and extras.
Mandatory Costs of Hiring an Employee in Bolivia
Let’s first take a look at what you must legally pay your staff in Bolivia in compliance with local laws and regulations.
Salary
Bolivia is often overlooked as an outsourcing destination. However, it’s becoming increasingly popular for its budding IT talent and customer service workers. Cost-effectiveness is a crucial advantage — the current minimum wage in Bolivia is BOB 2,250 a month (about US $325).
However, salaries for skilled workers and sophisticated IT talent will vary greatly. You can get an idea of average salaries by doing some market research or partnering with a local staffing agency. That said, salaries in Bolivia remain significantly lower than in the US and Canada, thanks to the country’s low cost of living.
Mandatory taxes and benefits
Payroll costs in Bolivia add up to 16.71% of the employee's gross salary. These include:
- 10%: Health Insurance
- 3%: Social Security
- 2%: Housing Fund
- 1.71%: Professional Risk Insurance
Employers must also withhold taxes and other contributions from their employees:
- 13%: Individual Income Tax
- 10%: Pension Fund
- 1.71%: Professional Risk Insurance
- 1%: Other Contributions
Mandatory bonuses
Like in many other countries in the region, employers in Bolivia must pay a thirteenth-month bonus to all employees. However, Bolivia also mandates a fourteenth-month bonus when the country’s GDP growth is above 4.5%. This is announced in July, and both payments are due at the end of the calendar year.
Paid leave
There are several types of paid leave in Bolivia.
- Public holidays: There are 11 public holidays in Bolivia.
- Paid time off: Full-time employees receive 15 days of paid vacation after their first year of service. This number increases to 20 days after five years and 30 days after ten years.
- Sick leave: Bolivian employees can take up to 26 weeks of paid sick leave per year. They receive full pay from day five onwards. The employer is responsible for 25% of the payments, and social security takes care of the rest.
- Parental leave: New mothers are entitled to 90 days of maternity leave at 100% of pay; employers cover 10%, and social security covers 90%. New fathers can take three paid days of leave after their child is born.
- Bereavement leave: Employees can take three paid days of leave when an immediate family member passes away.
- Marriage leave: Employees can take three days of leave after marriage.
- Birthday leave: Employees get half a day off on their birthday.
Overtime Pay
The standard working hours in Bolivia are eight hours per day for up to six days per week. Any overtime is paid at double the rate and cannot exceed two hours extra per day.
Severance Pay
If fired without just cause, employees are entitled to severance pay amounting to one month of salary for every year worked.
Additional Costs of Hiring Bolivian Talent
Today’s talent market is extremely competitive. To hire top Bolivian talent, employers may also want to offer a benefits package. This will help during both search and retention. Here are some benefits you might consider offering Bolivian employees along with other possible costs.
Benefits
Offering the right benefits package can help you stand out from the competition. In Bolivia, many employers offer private health insurance for employees and their families. Prices for this vary greatly, depending on the type and extent of coverage. However, one report puts the average cost of private health insurance in Bolivia at USD 257 per year.
For highly competitive roles, you may also want to consider added vacation time, flexible schedules, extra pension benefits, and so on.
Bonuses and extras
Finally, you’ll want to think about smaller expenses like gifts for your staff for special occasions, comped meals or coffees for meetings, among other things.
If you hire one or two employees in Bolivia, they’ll likely do remote work. Even so, it can be beneficial to pay for a membership at a coworking space or provide funding to set up a home office. In La Paz, Bolivia’s business capital, this may run you anywhere between US $100 and $400 per month.
However, you might be hiring an entire team to work on larger projects such as software development. If that’s the case, it can be wise to rent an office space to facilitate collaboration among your staff.
Average Cost of Hiring
Below is an estimate based on a salary of $100,000 for an employee in Bolivia. This salary is for ease of calculation and will change based on several factors specific to your hiring goals including employment contract details, the candidate’s experience and education, and the type of position.
Average Cost Of Hiring One Employee in Bolivia (Annual in $USD)
MANDATORY PAY
- Salary: $100,000
- Employer Taxes: $16,710
- Health Insurance
- Social Security
- Housing Fund
- Professional Risk Insurance
- Thirteenth-month bonus: $8333
- Fourteenth-month bonus (if GDP is over 4.5%): $8333
DISCRETIONARY PAY
- Private Health Insurance: $257
- Other Benefits and Bonuses
TOTAL: $133,633 + Benefits and Bonuses (discretionary)
Note that these totals do not include other standard costs like soft benefits commonly offered in Bolivia.
A Global EOR Can Help You Manage International Payroll
With so many costs to consider, it may feel overwhelming to start with global hiring. An Employer of Record (EOR) can help. An EOR like Borderless can help you compliantly hire and pay employees in Bolivia.
If you’d like to get started with global hiring but aren’t sure how then book a demo with Borderless. We’ll walk you through every step, so you can reap all the benefits without the added headaches.
Disclaimer
Borderless does not provide legal services or legal advice to anyone. This includes customers, contractors, employees, partners, and the general public. We are not lawyers or paralegals. Please read our full disclaimer here.
