Colombia’s government has raised the minimum wage for 2020 by 6% to $980,657 Colombian Pesos ($298.92 USD) per month, including the transportation subsidy mandatory for employees making less than twice the official minimum wage. The minimum monthly salary will be set at $877,803 with a transportation subsidy of $102,854.
“This year, after having spoken with the private sector and with political sectors, we have made the decision to take quick action in the Congress, to be able to carry out that additional premium that will allow us, in the year 2020, to arrive a million pesos or more than a million pesos for the vast majority of workers in our country,” said Colombian President Ivan Duque. “We are going to make that effort, we have to do it, because we want families in Colombia that have an increasingly decent income.”
Taking inflation into account, the real increase is 2.12% according to government calculations, considering expected 2019 inflation of 3.88% and an expected rate for 2020 of 3%. The current administration has increased the minimum wage 12 percentage points in the first two years at the helm, which in turn represents a cumulative real increase of 4.83 percent (2.4% real annual average), which is the largest that has been obtained in any Colombian government in its first 2 years of mandate in the last 30 years.
Colombian wages are relatively low, resulting in constant dissatisfaction by the unskilled workforce, however the country has relatively expensive labor regulations, meaning that the cost to employers is over 50% higher than what the employee finally pockets. This also results in a large percentage of the workforce employed informally in the cash economy and not contributing to social security or employment tax regimes.
The President also announced a decrease in the contributions pensioners who receive a minimum monthly salary make, from 12% to 8% in 2020, continuing to fall to 4% in 2022; and that for pensioners between 1 and 2 minimum wages the contribution will be 12% to 10% in 2020. This calculates to a real benefit of $ 33,000 per month for each person, says the government.
Above photo: President Duque announces new measures in the low-income Cartagena neighborhood of El Pozón during a Christmas gift handout event. Photo credit: Juan Pablo Bello – Presidencia de la República