Minimum wage: would the increase for 2021 be less than 6%?

The unions are looking for the minimum wage for the following year to reach one million pesos, which would mean an increase of around 15%.

Anif recommends that it should be less than 6%: around 2% or 3%.

Below, we present the figures that are being handled by the different sectors.

Although formal discussions on the minimum wage increase for next year have not started, different points of view on the subject have been heard. What is clear is that this year the issue will have an added value: the economic crisis the country is going through and the astronomical unemployment figures due to the pandemic.

In this regard, some unions have already begun to analyze the situation. One of them, the Central Unitaria de Trabajadores -CUT-, through its president, Diógenes Orjuela, stated to the media that the increase should be higher than the 6% that was made for 2020.

For him, the ideal amount would be 15% ($131,670), a percentage that could include the transportation subsidy. Thus, the current amount of $877,802 would increase to 1 million pesos on average, and the loss of income due to the economic situation would be “compensated”.

“Indisputably, the increase should be higher than what it was this year. We do not have figures yet, but if in normal times we ask for 10 % or 12 %, this time we could do it up to over 15 %”, he expressed in La República.

He added:

“We are in a serious unemployment and fiscal situation. For any reactivation the government must dialogue with everyone, not only with unions and bankers, and a vital effect for the reactivation is that there is more income for the workers. We think that the increase must be higher and I am not saying that it should be assumed by the businessmen alone, the Government must adopt costs because there will be no reactivation without an increase in consumption”.

For its part, the National Federation of Educators -Fecode- thinks that, as a minimum, the salary for next year should be one million pesos, which would imply an increase of 15%.

Its president, Nelson Alarcón, recalled that at the end of 2019 they proposed that the minimum wage should be at one million pesos, and this year there should be talk of a higher increase. For him, a “6 % increase would be pyrrhic”; it has to range between 10 % and 15 %.

Increase should be much less than 6%.

In view of the above, and as expected, research and think tanks do not see the 15% figure as viable due to factors such as the fiscal situation, the way in which unemployment has increased, low productivity and inflation, and the effects on the private sector.

The “increase should be similar to inflation, which the Bank of the Republic projects at 1.5% or 2%, and less than the 6% decreed for this year”.

For these, the increase should be similar to inflation, which the Bank of the Republic projects at 1.5 % or 2 %, and less than the 6 % decreed for this year; no more than $56,000.

Mauricio Santamaría, president of Anif, stated that the maximum increase should be between 2 % and 3 %. Otherwise, it would generate higher unemployment and informality due to the marked deterioration of the labor market in 2020.

“It is a scenario that has to call us all to be responsible because, if it is too high and beyond inflation, the only thing it will do is to further deepen the crisis and hit lower-income households. We must call the Government, workers and businessmen to be responsible in order to find a balance that allows recovering the purchasing power”, he said to the media.

For Sergio Clavijo, former president of this entity, an increase close to 2% would be fair to promote employment in weakened SMEs and avoid the collapse of higher unemployment rates.

Nelson Vera, former vice-president of Anif, assures Dinerothat the way to measure the minimum wage increase should be based on specific factors on an annual basis.

“To the extent that we deviate from that universal rule of inflation plus productivity, we can spoil the recovery and the reemployment of people who have lost their jobs because of the pandemic,” he says.

He warns that an increase to this wage modality may result in the intensification of informality. He adds that, ideally, the increase should be between 4% and 5.5%.

For Mario Valencia, director of Cedetrabajo, employers should consider the situation and seek agreement.

“The union council should make a great effort not to continue with the discourse that the best way to save companies is to take away the rights of their workers. On the contrary, business solidity depends on having well-paid workers. Otherwise, we will return to the pre-pandemic ‘normality’ of a precarious labor market with weak companies”, he assures.

Source: Actualícese