This is how the minimum wage has increased in Colombia in recent years

( Spanish) — Colombia is moving towards the discussion of the minimum wage for 2023, key in a context of high inflation, depreciation of the local currency and not very encouraging growth forecasts.

On December 5, the minimum wage agreement table will be installed for next year, according to the schedule revealed this week by the Ministry of Labor, which will participate in negotiations with workers and employers.

For this 2022, the minimum wage was set at one million pesos (about US $ 200 at the current exchange rate), which meant an increase of 10.7% compared to 2021.

Negotiations for next year. However, they will be marked by a very different national and international economic reality.

On the one hand, Colombia registers an interannual inflation of 11.44%, according to the most recent DANE data that correspond to the month of September. Added to this is the strong depreciation of the Colombian peso against the dollar: this Monday, the local currency reached a new low against the greenback and closed with a fall of 1.46% to 4,990 pesos per dollar.

So far in 2022, the Colombian peso has devalued almost 24% against the dollar.

And the economic outlook for 2023 is not encouraging. Amid fears of a global recession, the International Monetary Fund estimates that Colombia’s real GDP will grow 2.2% next year compared to 7.6% growth in 2022.

tripartite negotiations

“We will discuss the minimum wage with employers and workers, with whom we will analyze the different factors such as productivity, the loss of purchasing power of wages and other conditions that are complementary,” said the Minister of LaborGloria Ines Ramirez. Among the possible complementary measures, he explicitly referred to a freezing of the prices of the basic food basket. “The salary increase is 10% and when the basic household products increase by 12%, this generates that the purchasing value is higher by the cost of living,” the hierarch explained in this regard.

After the announcement of the table for the negotiations, Francisco Maltés, president of the United Workers Central, he said at a press conference that its objective was “to recover and maintain the purchasing power of workers so that demand is maintained and they can remain in employment.”

To calculate the numbers, the parties involved in the negotiation will have to take into account the figures corresponding to the month of November.

How has the minimum wage evolved in Colombia?

From 1980 to date, annual increases in the monthly minimum wage have ranged between 3.5% and 27%. The year in which the largest increase was recorded was in 1989, while the smallest was in 2021 (which was set for 2020 in the midst of the coronavirus pandemic).

The late 1980s and early 1990s saw the most significant percentage increases, as can be seen in the chart below.

If the last two decades are taken into account, the largest increases in percentage terms are those that came into force in 2000, 2001 and 2022, which were around 10%.

The real value of the increases depends on inflation, which in its year-on-year measure has already exceeded the figure set by the Government for this 2022 by just over one percentage point.