Discussion Underway on How Much the Minimum Wage Should Rise for 2024 in Colombia

More than two months remain before the year’s end, but the discussion has already begun regarding how much the minimum wage in Colombia should increase for 2024. It’s important to note that this salary is what a significant number of formal workers in the country earn. Additionally, it serves as the economic basis for penalties and various legal calculations.

With still very high inflation, standing at 10.99% in the latest report, labor unions have requested that the government demand a 16% increase, the same percentage that was implemented in January of this year. The unions argue that the high inflation rates in recent years render lower increases meaningless.

It’s worth remembering that for 2023, the minimum wage was set at 1,160,000 pesos, up from 1,000,000 pesos in 2022. However, the significant increase was quickly surpassed by inflation, which is just beginning to decline in recent months, although still very slowly.

The government, in line with most experts, predict that inflation in December 2023 will range between 9.2% and 9.8%, in any case managing to drop below double digits. In December 2022, the annual CPI stood at 13.12%.

CUT proposes a 16% increase

The Central Unitary Workers’ Central (CUT) proposes a 16% increase. It’s a maximum proposal that aims to match last year’s increase; the union believes that this year’s increase must be in double digits, taking inflation into account.

“What we see is that this year, despite wages rising above inflation, there hasn’t been more (buying power) generated. On the contrary, it has been decreasing, and inflation stands at 10.99% in August. That’s an argument in our favor for the discussion,” said Fabio Arias, president of the CUT to El Tiempo newspaper.

In addition, to support their request, Arias stated that there are outstanding debts with previous governments that justify the 16% increase. The union leader referred to “the differentiation between multifactorial productivity and labor,” as he told RCN Radio.

Likewise, CUT leaders have announced upcoming meetings with other labor unions to reach a unified request at the negotiating table with employers and the government, where this year’s discussion seems to be advancing several weeks ahead of schedule.

Divergence on a raise above the CPI

A few days ago, former Finance Minister José Antonio Ocampo admitted that the minimum wage increase would be around 10%. On the other hand, the economic research center ANIF warned of the consequences of an increase exceeding 9%.

It’s important to consider that there are two main variables for setting the annual increases in the minimum wage. The first is the Consumer Price Index (CPI) for the current year, and the second is the projection of inflation for the upcoming year. Considering that in December 2022, inflation was at 13.12% and is expected to be around 9.5% at the end of the current year, the 16% increase in January 2023 has proven to fall far short of ensuring the maintenance of purchasing power.

In any case, the discussion has only just begun. There are still a few weeks left to reach an agreement on the final amount. In the meantime, millions of Colombian workers are awaiting a decision that will directly impact the household economy of many families in the country.