One of the most important discussions of every year, the increase in the minimum wage, has no start date yet. Unlike other years, the salary increase for 2022 has taken on an even more relevant role, in a scenario in which inflation, which in October was already at 4.58%, sets a high base to start the bid for the salary increase.
Although the Minister of Labor, Ángel Custodio Cabrera, had announced in recent days that tomorrow, November 26, the first formal meetings for the negotiation would take place, they will not begin until next week.
“We are going to change the form a bit, and we will announce it in the first week of December. More than changing the agenda, we want to listen to think tanks and other studies, and for employers and workers to tell us who we should listen to, that is why we have not started ”Cabrera said.
The minister assured that he notes “A very conducive environment despite all the economic difficulties that the country is experiencing”, and that he expects you to agree and not to be defined by decree, as on other occasions.
However, for the experts, the discussion of the minimum wage for 2022 will face several conjunctural challenges derived from the pandemic, ranging from a tight calendar, through the implications that high inflation has for the discussion, to questions in the measurement of the productivity.
CHALLENGES OF THE DISCUSSION
First, there is inflation. According to Edgar Bejarano, a professor at the Faculty of Economics at the National University, it is highly affected by circumstances derived from the pandemic, such as price increases in inputs, which at the outset puts a high figure on the table, and “Another issue is the devaluation of the currency, so that it would lead to trying to recover a little the value of the salary.”
Iván Jaramillo, researcher at the Labor Observatory of the Universidad del Rosario, points out how, according to the legal deadlines, the negotiating table would have less than two weeks to reach an agreement before December 15, when the first expiration date is reached, which makes an agreement difficult.
In addition, Jaramillo points out that that is why it has been proposed on other occasions to even modify the calendar, since it works with data such as projected annual inflation, instead of a definitive figure.
In addition, the expert suggests that the current model be revised. “We have a system aimed at fixing by agreement, but in reality it is usually set by the government, only between 1996 and 2020 we have reached seven agreements, which shows the necessary revision of the model”, said.
Precisely, in the most recent report of the Private Competitiveness Council, one of the recommendations in labor matters is to improve the mechanism for setting the minimum wage, as it maintains that it does not always adhere to the inflation and productivity criteria established by law.
“A minimum wage that does not correspond to labor productivity in highly informal contexts, as in the case of Colombia, is one of the main determinants of unemployment”, notes the report.
Bejarano points out that conventional criteria, such as inflation and the productivity of the economy, “Somehow it would be necessary to look at them with tweezers.”
According to the academic, “There has been talk of increased productivity,” but because the proportion of the product has increased in terms of production, but not employment “, and the ideal would be an increase for innovations and in terms of work. In this Jaramillo agrees, who mentions that productivity is taken into consideration in a multifactorial way, and not only from the labor component.
“The conventional ways in which a salary adjustment has been set are relatively difficult to read. There are a series of conditions that do not work as they usually do, so in this case certain political agreements could work ”, Bejarano pointed out.
Another issue that Jaramillo brought up is the work of David Card, one of the winners of the Nobel Prize in economics in 2021.
“Card affirms that the logic that the equation that the increase in the minimum wage leads to an increase in unemployment seems not to be so correct or that they are directly related, and there is a great debate on the subject, and this admits matrices and theoretical confrontations “.
MOMENTUM TO GROW
Another position that experts point out is the role that next year’s minimum wage plays in the recovery of the economy and how it can affect it. “You have to see if the salary increase is done with the objective of stimulating the economy through higher spending or demand, because in that case it may make sense to increase the salary significantly, but if you think about variables such as the fiscal deficit , it is possible that this type of decision is not convenient “Bejarano questioned.
For his part, Jaramillo indicated that “In a process of theoretical recovery of the economy there should be a response of income redistribution and a leverage of aggregate demand to strengthen those levels of economic recovery, which have not been sufficiently translated into levels of productivity”.
THE PARTIES TO THE DISCUSSION
Portafolio consulted the unions and workers’ centrals that are part of the consensus-building table, and for now most abstain from giving statements.
However, Hernando José Gómez, president of Asobancaria, stressed that “A fundamental criterion for deciding to increase the minimum wage must be to protect the generation of employment to once again reach a single-digit unemployment rate.”
Likewise, Diógenes Orjuela, general secretary of the Central Unitary of Workers (CUT), said that “the minister has not consulted dates, and it is expected that the three parties will soon set a date.” Orjuela said that “They all agree on the seriousness of the situation, and that it cannot be resolved if money is not put in their pockets.”
LAURA LUCÍA BECERRA ELEJALDE