Chile finalizes gradual increase in the minimum wage

Fulfilling one of his main campaign promises, Chilean President Gabriel Boric raised the minimum wage in the southern country to 500,000 pesos, which must be achieved gradually until July 2024.

The Government of Chile also ordered the delivery, as part of this package to alleviate the economic tensions of the population, of a subsidy to support micro, small and medium-sized companies that comply with the increase, despite the harsh questioning of a bloc of opposition in the Parliament.

The “fiscal responsibility” agreement erected by Boric cuts deadlines from his initial promise to increase the minimum remuneration to 500,000 pesos only in 2026, at the end of his term. However, year-on-year inflation of 9.9% —in April the march returned to double digits— precipitated its debate and subsequent approval, with the support of local unions. As is known, the The law was approved in the Chamber of Deputies after weeks of intense negotiations between the Executivethe opposition and the business community.

“This project expanded benefits, fulfilled the commitments we signed and added an extension of benefits to SMEs,” said the Minister of Finance, Mario Marcel.

Before, Chile had a first increase in the minimum wage of 14.3% in May 2022, one of the largest readjustments in the last 25 years. Now, it will go from the current 410,000 pesos to 440,000 in May 2023. Then, it will go up to 460,000 in September, to then conclude its 500,000 career on July 1 of next year.

Chile has one of the highest minimum wages in Latin Americabut it is still far behind its OECD peers.

The key

Peaks. In March 2022, the minimum wage was 350,000 pesos, but the Government agreed to raise it to 380,000 in May and 400,000 in August. If annual inflation exceeded 7%, it would automatically adjust by 410,000 in January 2023, which it eventually did.