The minimum wage in Colombia for 2025 will be 1,423,500 pesos (1,623,500 pesos, with transportation assistance included), after the increase of 9.53% who decided the National Government. The increase was announced andl President Gustavo Petro, on the afternoon of Tuesday, December 24, 2024. One week after the first deadline for unions and business associations to reach an agreement (December 15) and one week before the final deadline (December 30).
(See: How much will it cost an employer to formally hire a worker?).
Although last Wednesday the 18th, the Minister of Labor, Gloria Inés Ramírez, had said that there was still some opportunity to exploit to reach an agreement and that it would call up to two extraordinary sessions to achieve it, such a scenario never occurred and the Government ended up making the determination.
The agreement was not possible because the parties had very distant positions and desires. lThe unions and workers asked for a 12% increase, while the guilds, As unofficially commented, They were between 6.5% and 7.5% maximum.
(See: President Petro’s new defense of his increase in the minimum for 2025).
This being the case, what did the Government take into account when deciding to increase the minimum wage by 9.53%?
Minimum wage.
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The figures for the increase in the minimum wage for 2025
In the decree increasing the minimum wage for 2025, the Petro government announced the figures that were taken into account for the 9.53% increase. They contain data such as inflation, productivity per hour worked and salary contribution to national income.
(See: Why micro and small businesses would be the most affected by the increase in the minimum).
These were the figures:
– Inflation 2024 (estimated value from the Bank of the Republic): 5.20%.
– Inflation 2025 (estimated value from the Bank of the Republic): 3.00%.
– Average inflation 2024 and 2025: 4.10%.
– Productivity per hour worked (delivered by Dane): 3.43%.
– Salary contribution to national income (delivered by Dane): 2.00%.
With these clear data, the Government added the average inflation for 2024 and 2025, productivity per hour worked and salary contribution to national income. and the result was 9.53%.
(See: The services that will increase next year with the adjustment of the minimum wage).
“We must remember that Colombia is the third country with the highest inequality in the world by 2024 (Gini: 0.556), a figure that calls us to reflect on the well-being of the poorest and most vulnerable population. In Colombia, more than 3 million people earn a minimum wage and more than 10 million earn less than a minimum wage. The minimum wage is an integral element of policies aimed at overcoming poverty and reducing inequality (ILO)“said the Government.
(See: President Petro’s ‘hit’ on businessmen by announcing an increase in the minimum).
Minimum wage.
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The Government’s arguments for its decision on the minimum for 2025
Among the reasons why the minimum wage for 2025 increased by 9.53%, The Petro government asserted that the increase must meet at least two purposes: “First, guarantee the purchasing power of families so that they have access to a family basket that allows them to live with dignity. Second, boost the economy through greater consumption of goods and services“.
“If the minimum wage grows, the economy grows, not the other way around, it is not with slave workers, it is with workers who earn and have dignity in their lives that the economy of a country grows. Colombia is going to grow more if there is dignity for the working people, if there is income higher than inflation and the standard of living rises and if we can get more people out of hunger.“, argued, for his part, President Petro.
He also said that The recent increases in the minimum have helped lift millions of Colombians out of poverty and hunger.
“Raising the salary in 2022 by 16% had consequences and that was that 1.6 million people in Colombia emerged from hunger, from monetary poverty, that 1.1 million left extreme poverty and that 2.5 million people moved away of moderate food insecurity and extreme food insecurity“, he added.
Criticism of the increase in the minimum
Despite the arguments provided by the Government, the country’s business associations criticized the decision. Jaime Alberto Cabal, president of the National Federation of Merchants (Fenalco), considered that “President Gustavo Petro’s 9.53% increase is totally high and populist. It is to ingratiate himself with the workers and unions of the country” and “puts at risk the reductions in interest rates and the fight against inflation that the Bank of the Republic is doing“.
For its part, Bruce Mac Master, president of the National Association of Industrialists (Andi), commented that “It is almost always about making announcements that many people can celebrate, but ends up generating immense costs for the entire society in the future, especially for the most vulnerable. This is not new, this has already been put into practice by many leaders in many places on the planet, and the results are always more poverty, less development, more unemployment, more fiscal costs for the State and finally despair of the rulers.“.
The minimum wage of 1,623,500 pesos, with transportation assistance included, will be effective from January 1, 2025.
CAMILO HERNÁNDEZ M.
Digital Portfolio Editor
