Minimum Wage 2021: 3.5% increase to $1,014,980

The Colombian government set the minimum wage increase for 2021 at 3.5%, thus reaching $1,014,980 (SMMLV $908,526 + transportation allowance of $106,454).

“New minimum wage for 2021. For the first time in the history of Colombia and fulfilling a campaign promise, it will exceed, including the transportation allowance, one million pesos. In total it will stand at $1,014,980. (SMMLV $908,526 + transportation allowance $106,454),” informed President Iván Duque this Tuesday on Twitter.

The president added that “this increase of 3.5% of the SMMLV and transportation allowance for 2021 is more than double the inflation for the end of 2020 (1.5%). It is necessary to maintain the balance between purchasing power and protect and generate new jobs,” he said.

After the failure of negotiations between businessmen and trade union entities, President Duque presented the decree regulating the minimum wage increase that will be in force in 2021.

This increase has the particularity of the economic situation Colombia is going through due to the pandemic and will be decisive in the formal labor market.

According to the decree, the increase of the minimum salary corresponds to 3.5%, which means that the legal minimum salary in force as from 2021 will be $908,526. As for the transportation subsidy, the value will be $106,454.

The above implies that the minimum legal salary in force for 2021 with transportation or connectivity subsidy included will be $1’014,980.

The initial proposal of the union associations was 13%, which was reduced to try to reach an agreement, while that of the employers was around 2%.

Recently, it was reported that Corficolombiana’s economic research team conducted an analysis in which it stated that the minimum wage increase for 2021 should not exceed 2.5% in order to protect formal employment in Colombia.

The country was expecting the increase to be defined for 2021, since it determines not only the income that Colombians will have, but also the behavior of the labor market regarding the creation of formal employment and the reduction of informality, the latter being one of the most important challenges for the current Administration.

In recent days, the Minister of Labor, Ángel Custodio Cabrera, had advanced that the minimum wage would exceed one million pesos with the transportation or connectivity subsidy, the latter in the case of people who will continue working from home.

Source: Actualícese