2024-01-02 11:12:04
There was no agreement on the minimum wage, but the Government of Gustavo Petro decreed a reasonable increase that takes into account the macroeconomic reality of the country without leaving aside the commitment to have more decent salaries. Curiously, the news that stole the spotlight during the announcement was that the president announced that he was open to proposing a new tax reform and invited the business sector to participate. If inflation continues to fall in 2024, it will be a significant real increase, but the question remains open as to whether a combative government will be able to build consensus around more ambitious fiscal measures.
The unions’ proposal was irrational: they put an 18% increase in the minimum wage on the table. At the close of this edition we are still on the eve of the official data on final inflation in 2023, but the projections of the Bank of the Republic placed it between 9.4 and 9.8%. In that sense, the unions’ position was unmanageable. Such a large increase in the minimum would not only have affected employment, but would throw away the difficult task of inflation control that the country has had in the last two years.
Fortunately, the Petro Government recognized this and the Minister of Labor, Gloria Inés Ramírez, said that the minimum wage is increased “to an amount of $1,300,000, that is, an approximate increase of 12%, and an increase in transportation assistance. to $162,000, which corresponds to approximately 15%.” For his part, President Petro recalled that “employment has grown, more than 800,000 jobs in one year,” which shows that with the 16% increase in the minimum wage for 2023 (and an inflation of 13, 1% in 2022) the real salary grew “and as it grew it did not knock down employment,” said the president. He is right, but warning signs are also important, such as an economy with very low growth and unions expressing difficulties in doing business.
Which brings us to the other announcement that came at the end of the year. President Petro asked to discuss a new tax reform, with the idea of “lowering the corporate income rate and raising the income of natural persons at its highest levels. In such a way that the company is freed to be able to compete and be more productive.” This, undoubtedly, in response to the blows that the last reform had in the Constitutional Court. We agree that the tax statute needs future reforms, but the country cannot be approving a tax change every two years, a practice that has been in place since past administrations. If the Petro Government wants to move forward with this great project, a first step is to change its political strategy: if it does not have a conciliatory tone that builds consensus, the same thing will happen as with the other reforms that are in Congress. The administration no longer has time to descend into chaos and political squabbles unless it wants that to be its legacy.
The year begins, then, with good economic news, but the tension of uncertainty is still present. If the Government continues to adopt prudence and dialogue, we will have a recovery in 2024. That should be north.
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