ColombiaOne.comColombia newsNo Agreement Yet on Minimum Wage in Colombia

No Agreement Yet on Minimum Wage in Colombia

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Minimum wage Colombia
No agreement, for now, on minimum wage in Colombia- Credit: Public domain/ Pixabay/ Caruizp

No agreement has been reached yet on the minimum wage in Colombia. After the first deadline, last December 15, for reaching an agreement between unions, employers and the government on the increase for 2024, the law now establishes that another phase is opened to reach an agreement before December 30. If no agreement is reached, the government wil have the right to decide the increase.

So far, what is known is that the workers’ representatives have proposed a considerable increase of 18%, citing historical debts, while the employers have expressed their disagreement with any increase that exceeds the annual CPI for November, which was 10.15%. Economic experts are placing their bets on an increase of between 11 and 13%.

An impactful decision

The negotiation of the minimum wage is a subject of great anticipation for many citizens every year. According to data from the National Administrative Department of Statistics (DANE), 2.25 million people receive this salary. However, 60% of the country’s workers receive a lower monthly payment because they work in the informal sector. In more precise figures, of the total of 22.7 million people employed in Colombia, 10% earn the minimum wage and some 10.5 million more are paid even less, as they work in the informal sector.

In the words of the Minister of Labor, Gloria Inés Ramírez, the government is working to guarantee the rights “of the most vulnerable”. In this sense, she defended the important increase agreed a year ago as a historical debt owed to the workers. “Every year we look at how much wages weigh in the GDP, and historically in Colombia workers have always been left with low wages, and in terms of purchasing power they have lost a lot; unlike what happened to us in 2022, where we took measures to protect the purchasing value of the wage; this is why we work the UVTs, because we unleash many goods and services that are related to the minimum wage hike,” said the minister.

On the other hand, the minimum wage serves as the economic basis for various operations, from the payment of fines to the establishment of installments in mortgage loans subsidized by the State.

In 2022, with inflation at 13.12%, the Colombian government-sponsored increase was 16%. This year, with a slow decline in the CPI, but with a decline in economic activity and growth, few expect such a generous increase.

Onlookers in the financial world foresee drawbacks in the economic recovery if the State approves an increase higher than the annual CPI.

Colombian minimum wage, among the lowest in the world

The minimum wage in Colombia is among the lowest in the Latin American region. Costa Rica (US$ 610), Chile (US$ 475) and Ecuador (US$ 475) are the countries with the highest minimum wages.

It is also the case that Mexico, with a very low rate of pay, has agreed to a 20% increase in the minimum wage by 2024. Despite the disagreement that exists there between employers and workers, as it does in Colombia, the government of President López Obrador approved a 20% increase, a figure that was accepted by all parties.

The mechanism for setting annual increases varies from country to country. However, in almost all countries a negotiation between the parties is sought, with the government acting as mediator. However, in Uruguay there is the possibility of setting a differential wage by productive sector, which opens up an important possibility of sectoral collective bargaining.

This does not occur in Colombia and is precisely one of the points where most tensions have arisen in the negotiation of the labor reform being carried out by the government.


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