On December 24, President Gustavo Petro announced from Zipaquirá (Cundinamarca) that by 2025 the minimum wage in Colombia will rise 9.54%, that is, it will increase by 123,500 pesos and will remain at 1,423,500 pesos without transportation assistance.
(Read: The fight between Petro and Duque over the increase in the minimum wage).
Likewise, he announced that with the assistance of transportation, The total salary will be 1,623,500 pesos; That is, the aid will increase by 200,000 pesos.
This increase was celebrated by workers, but strongly criticized by businessmen, unions and some experts who stated that the increase would have negative effects on the economy, as it could lead to greater unemployment and the levels of informality in the country would skyrocket, among other aspects.
Although several actors questioned the Government’s decision, considering that “it has no economic, social, or technical support”the alarms are not new.
(Here: The figures on which the Government based the decision to raise the minimum wage by 9.53%).
Even before the installation of the labor and salary policy consultation table, in which the increase was discussed, some voices had warned about the consequences that a high increase in the minimum wage has for an economy.
However, these alerts were ignored with the increase decreed, which intensified the questions about the Government’s decision.
“With this decision, President Petro not only puts at risk the viability of hundreds of micro, medium and small businesses (97% of the Colombian business fabric), but also affects the generation of new jobs, risks the jobs that already exist. exist and encourage informality”said the president of Fenalco, Jaime Alberto Cabal.
For Luis Fernando Mejía, Executive Director of Fedesarrollo, this increase would have several effects. “First, by substantially increasing the cost of formal employment, it will further induce informal hiring, especially in microenterprises. Second, it will put upward pressure on inflation, delaying the reduction of interest rates by the Bank of the Republic”.
Minimum Wage 2025
Source: IStock
The warnings
In fact, at the end of November, before the first meetings of the tripartite table, the Fiscal Observatory of the Javeriana University published an analysis in which it warned that there are several factors that would work against a large increase, among them productivity, due to the slow pace that the national economy has brought throughout the year.
These researchers began by highlighting that, beyond reviewing how much the minimum wage increases, the impact and effect on a large scale must be analyzed, since their accounts show that despite the increases in the legal minimum wage, These have not translated into a significant improvement in workers’ income nor have they positively impacted the salary structure in the country..
“On the contrary, and despite the fact that there have been large increases in the minimum wage, over the last decade, the average wage in the economy has shown a slight but worrying downward trend in its proportion to the minimum wage”they stated.
(Besides: TransMilenio and SITP fare will rise to $3,200 in 2025).
Specifically, the three elements that would not favor a considerable increase in the minimum wage on this occasion, for the Observatory, are three: informality, inequalities between workers and lack of productivity. Added to this is the lack of access to formal jobs that persists as a structural problem in the labor market.
“In the informal sector, the situation is more critical. In 2013, the average salary of informal workers represented 93% of the minimum wage, but in 2023 this figure was reduced to 78%. This decrease reflects that increases in the minimum wage are not only insufficient to improve the situation of informal workers, but can accentuate their vulnerability.”says the report.
The report puts on the table that an increase in the minimum wage without structural interventions that encourage formalization and better working conditions could aggravate disparities, while recommending taking into account that informal workers, which mostly include women and people from rural areas, represent one of the most vulnerable groups in the country.
In that sense, the Javeriana Observatory said that “We consider that the increase in the minimum wage should be based on the Consumer Price Index (CPI) and the average growth of productivity, as fundamental principles to guarantee that the adjustment preserves the purchasing power of workers and is aligned with the economic capabilities of the country. However, this salary policy must be complemented with a more regionalized approach, which recognizes the economic and social differences between urban and rural areas and specific regions..
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