The Colombian government has officially announced a significant increase to the minimum wage, with President Gustavo Petro decreeing a 9.54% rise for 2025. This adjustment raises the total minimum salary to 1,623,500 pesos, comprising 1,423,500 pesos as the base salary plus 200,000 pesos for transport aid. This raise, announced during public engagements, has led to heated discussions across various economic and social sectors, particularly over its potential repercussions on inflation, employment, and the stability of micro, small, and medium-sized enterprises (SMEs).
The General Confederation of Workers (CGT) expressed deep concerns through an official statement, warning, "If inflation rises, it will increase the cost of living for workers themselves and diminish the purchasing power of all Colombians." They emphasized the need for the government to implement fiscal and tariff measures to alleviate the substantial burdens faced by SMEs, which currently account for more than 80% of formal employment in the country.
Gloria Ramírez, the Minister of Labor, noted nearly 200 goods and services identified for desindexation to counter the effects of the wage increase. She stated, "We have already ratified 188 products and requested the Ministry of Finance and other departments to indicate what other products can be desindexed." Among the proposed deindexed costs are housing and microcredit expenses, indicating the administration's effort to cushion the blow on consumers amid rising wage costs.
Meanwhile, business leaders voiced their apprehensions. Bruce Mac Master, president of the National Business Association (Andi), branded the increase as populist, projecting adverse economic impacts over the medium term. Luis Fernando Mejía, director of Fedesarrollo, warned it could spur increased informal employment, especially among microenterprises, adding more inflationary pressure and delaying interest rate reductions.
Conversely, political representatives from the Historical Pact lauded the decision for supporting workers. Representative Heráclito Landínez asserted, "It will recover the purchasing power of salaried individuals, as inflation is projected at approximately 5% annually." Fellow member María Fernanda Carrascal pointed out the strain on SMEs, highlighting the necessity for responsible policies to promote formal employment and business sustainability alongside the wage hike.
Changes from this wage increase extend to various payments, including fines, pension contributions, health co-pays, and fees for independent workers. Employees who work on Sundays and holidays will see added financial benefits. Under current laws, those working on these special days are entitled to a 75% surcharge on the regular hourly wage, which is now markedly enhanced due to the wage adjustment.
The newly defined salary structure sets the basic monthly wage to 1,423,500 pesos, yielding approximately 47,450 pesos daily, with the hourly wage calculated at around 5,931 pesos. For those tasked with work on Sundays or holidays, the pay with the added surcharge reaches about 83,037 pesos for each day worked, providing substantial compensation for off-days.
On the broader economic scale, the minimum wage increment evokes mixed feelings. While it ostensibly offers relief for workers relying on this salary to meet basic needs, it presents hurdles for businesses, particularly SMEs, which must recalibrate budgets to adhere to the new standards. The additional wage burden could sway the recruitment strategies of many enterprises, which may opt for fewer employees to mitigate rising costs.
Significantly, the government's wage adaptation arrives amid concurrent legislative movements concerning labor reform, proposing modifications to work hours, shifting the daytime working span to 6:00 am to 7:00 pm, and nighttime hours to 7:00 pm to 6:00 am. These changes, already passed by the House of Representatives, are posited to restore notable workers’ rights, with expected increases to monthly payments.
Also, from July 15, 2025, Colombian workers can look forward to reduced weekly work hours, transitioning to 44 hours weekly. This reform is part of an expansive labor initiative, with gradual plans to lower work hours to 42 each week by 2026. Minister of Labor Gloria Ramírez has clarified, though, this reduction will not decrease worker pay, as mandated by law.
The path the Colombian administration is forging with the minimum wage increase and impending labor reforms presents both promise and challenges. Workers anticipate improved living conditions, yet businesses face increased scrutiny and rising operational costs. The balance struck between aiding workers and maintaining economic stability remains to be seen as 2025 approaches.
