2023-12-24 21:49:52
Until now, it is known that employers and unions have not been able to agree on an increase in the minimum wage for the year 2024. Consequently, the Ministry of Labor has announced the continuation of bilateral meetings with the aim of reaching the most favorable agreement.
The Government has expressed its intention to achieve an equitable and justified increase that favors both workers and companies, with the aim of maintaining macroeconomic stability.
Minimum wage in Colombia. | Photo: Getty Images
The unions, for their part, reiterate that the increase in the minimum wage in Colombia for the year 2024 should be linked to both the inflation rate and employment and the country’s macroeconomic conditions. They propose an increase of up to 18%.
But what would such a high increase in the minimum wage imply? Well, this issue was resolved by the multinational EY through a press release.
This is what the statement says
“Faced with this panorama, the following analysis also identified the effects on the economy that a scenario in which, by decree, the minimum wage is increased by more than two digits, might cause:
- Pressure on profitability and business viability: in a context of economic slowdown in the country, increasing the minimum wage by two digits might compromise the finances of companies, since it is estimated that hiring a single employee with this salary might cost up to 50% for contributions to social security, parafiscal payments, vacations, endowments and unemployment benefits.
- Increase in the cost of social housing: within the Colombian legislation that allows the acquisition of a home through government subsidies and support, it was established that the price of these projects will be set at Current Legal Monthly Minimum Wages, with a maximum of 90 for Social Housing. Priority Interest (VIP) and 150 for Social Interest Housing (VIS).
Minimum wage. | Photo: Getty Images
This dependency allows us to infer a possible problem for families that have acquired or want to acquire a project with these measures, since the greater the increase in the minimum wage, the higher the cost of housing.
Likewise, these measures are accompanied by the incoming labor reform, which may generate higher labor costs that make it impossible to invest in the country.
- Increase in inflation rates: contrary to what is believed, a high increase in the minimum wage can generate a risk that companies will pass on high hiring costs to the prices of goods and services.
This factor is corroborated with the latest data reported for November by the National Administrative Department of Statistics (DANE), an entity that confirmed an inflation of 10.15% in relation to the same month of 2022.
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