Negotiations begin today to define the increase in the minimum wage

In the midst of the economic crisis, with the intermediation of the Government, unions and employers, negotiations begin this Monday to define the percentage of increase that the minimum wage will have for 2021 in Colombia. So far, the only group that has an official proposal are the workers, who propose an increase of 13.95%, that is, $ 122,000 pesos, a proposal that entities such as the National Association of Financial Institutions (Anif) or Fedesarrollo consider outdated, since, they allege, the minimum wage should not exceed an increase of 3%.

The unions will be represented by the Central Unitary of Workers (CUT), the General Confederation of Labor (CGT), the Confederation of Colombian Workers (CTC) and the Democratic Confederation of Pensioners (CDP), and at the head of the unions will be the National Association of Entrepreneurs (Andi), the Banking Association and Financial Institutions (Asobancaria), the National Federation of Merchants (Fenalco) and the Society of Farmers of Colombia (SAC); for the Government the Ministry of Labor, Ministry of Commerce and National Planning will participate.

Mauricio Santa María, president of Anif, maintains that an increase of more than 3% “would put the economic recovery at risk, in particular the creation of formal employment highly hit by the pandemic. For his part, Diógenes Orjuela, president of the CUT, explains that by raising the minimum wage to one million pesos “we achieve that people have resources, money is injected for consumption and a virtuous circle is formed that we are defending so that increase household consumption ”.

The business thinking centers also do not agree with the union’s proposal, since, they say, it does not comply with the analysis points established by law to define the minimum wage. These points are the consumer price index so far this year, that is, the increase in inflation which, most likely, will end at 1.5% and 1.8%; the Gross Domestic Product (GDP) should also be considered, as the Government estimates that it will decrease by about 6.4%. And finally, as La República explains, it is necessary to take into account ”the capital productivity of each economic sector. For example, in 2015 it was 0.15; in 2016, 1.20; in 2017, 0.36; in 2018, 0.28 and in 2019, 0.21 ″.

Luis Fernando Mejía, director of Fedesarrollo, explained to La República that this productivity will not grow much by the end of 2020, “We do not know the calculations for this year, but surely, it will not grow much and we consider that the increase should be between 2% and 2.5%, considering that there could be some increase in productivity ”.

The business centers conclude that the minimum wage cannot have an increase greater than $ 26,334 pesos by 2021. With the above, the minimum wage would be 904,137 pesos. “We must find a balance that allows us to recover the lost purchasing power, which is very little, and facilitate the adjustment of employment, therefore, an increase between 2% and 3% is the maximum that could be seen,” said Mauricio Santamaría, Presiente of Anif.

He also added that companies are experiencing a difficult situation and need additional aid, especially in the construction sector and services in recreation, travel, tourism and accommodation.

On the other hand, the unions do not have an official proposal on the increase of the minimum wage, but the president of the Society of Farmers of Colombia (SAC), Jorge Bedoya affirmed that the The meeting will have several meetings and that the numbers will be low due to the pandemic caused by Covid-19.

The debate was also joined by Gustavo Toro, president of the Colombian Hotel and Tourism Association (Cotelco) who said: “What the Constitutional Court says is that the increase must be close to inflation and, taking into account that and the difficulties of the pandemic, it should be around inflation. We have lost many jobs and companies are badly hit ”.

For their part, other business sectors have given their opinion regarding the increase in the minimum wage for 2021: “Obviously, the more money moves in the economy, consumption and employment are generated, but today many companies have difficulties to meet their payroll and have a high salary would generate more contract terminations. A balance must be sought, ”said Carolina Camacho, Labor partner at Posse Herrera Ruiz.

Regarding the government, President Duque assured that “within the framework of the National Commission of Concertation the debates are welcome”, but stressed that in these conversations it is necessary to “understand the condition of a pandemic and the urgent need that 2021 be translated in greater growth, greater jobs and opportunities ”.