Nearly half of Colombia`s work force earn less than the minimum wage, according to figures released by the Labour Ministry last December.
8.8 million Colombians, many of whom work informally or in “rebusque”, live on salaries below 300 US dollars a month. Surprisingly, as little as 6 per cent of the work force is paid the legal low.
Meanwhile, pension firms have revealed the “vast majority of Colombians” (according to Semana magazine) earn just 1-2 times the minimum; or between 300 and 600 dollars a month.
Every new year, the government enters into negotiations with leading businessmen and unions to fix the rate at which the minimum wage will increase.
President Santos this week heralded an “historic” 4.5% rise for 2014.
Those on the left and the right criticised the announcement, however. Former President, Alvaro Uribe – on the right – argued for 6% while Clara Lopez – on the left – said the increase amounted to less than 50 cents or 1,000 pesos a day, “not enough to buy a bag of milk”.
Of course some argue the minimum wage as an idea is counter-productive, while others would like to see a truly historic rise or a “living wage” as has been proposed in other nations.
But the question we have is that if just 6 per cent earn the minimum wage, isn`t focusing debate on a rise here a distraction?
Shouldn`t the government be directing efforts and policies on making it attractive for workers to leave “informality”?
Shouldn`t the government be looking to resolve the structural imbalances in the economy?
Perhaps it`s unfair to say they aren`t.
Santos’ administration has certainly reformed the tax codes and looked – or at least has said has looked – to diversify the nation`s output.
The problem is, as with much of the work of the current government, the rhetoric appears to outpace the reality. GDP growth is still healthy – pretty good, actually – and foreign investment continues year on year to break records.
But this macro-level activity tells just one side of the story. Long term, the government must focus on how it can make Colombians wealthier, to earn more and ultimately spend more.
When I had lunch with left-wing firebrand Jorge Robledo last year he told me that Colombia was a “pre-capitalist” country. His argument was that industry and business doesn`t function because corruption and “la rosca” (nepotism) distorts an immature, “pre-modern” market, as he called it.
Now I think Robledo exagerates, of course. But almost any economist will tell you that for a nation to develop it needs to build a strong middle class with real purchasing power. Colombia has a middle class, and she is progressing better than many of her regional neighbours.
However, she clearly has a long way to go if nearly half the work force earns less than 600,000 pesos.