Colombia’s informal workers benefit little from 4% minimum wage rise
The Colombian government announced an increase of 4.02% to the minimum wage for 2013 at the weekend, which will now sit at COL$589,500 (US$333) per month and will affect 1.2m workers.
According to Colombian Finance Minister Mauricio Cardenas this figure is 1.4% above Colombia’s inflation rate for the past year.
However the benefits of the increase will not be felt by the country’s large informal sector, which according to DANE, the Colombian National Office for Statistics, stands at 51.3% of the working population in urban areas and almost 60% overall. The real figure is expected to be higher than this, however.
Increasing formal employment is a sticking point for the Colombian government, and President Santos warned earlier this month that increasing the minimum wage by too much would encourage informality. The government claims that its tax reforms passed by Congress ahead of the Christmas break will help combat the problem. However, last week Minister Cardenas announced that a key facet of the reforms to incentivize employers to take on workers formally – the reduction of payroll taxes – will not be implemented until the middle of 2013.
Meanwhile, reaction to the increase was predictably mixed, with the President of Colombia’s Business Council, Rafael Mejia, calling it “prudent” while the leader of the CGT union Julio Roberto Gomez branding the increase “peanuts” and “disrespectful to the working class”. He said that his union would take action and called for the Standing Committee of Wage Policy and Labour which determines the rate to be restructured. Vice President Angelino Garzon, himself a former union man has, since coming to power in 2010, campaigned for further increases to the minimum wage, and is said to be at best luke warm about this recent rise calling the original offer of 3.5% “miserable”.