The expectation of salary increases that will be applied in 2024 is happening at the regional level. In Ecuador, the $25 that was taken for granted became nothing with the change of government and the decision that had to be made by November 30th was left until December 22nd. Colombia hopes to define it a week before, and in Peru it has already been announced that there will be no increase because it is in recession.
What happens in other countries is also measured by the performance of competitiveness. The National Federation of Chambers of Commerce of Ecuador has published a ranking of the basic salaries that apply in 15 Latin American countries and where Ecuador – with the currently valid 450 dollars – appears in the fourth place among the highest. Peru is 12th at $269 and Colombia is 14th at $242, according to data from each country’s central bank and with currency conversion.
In Ecuador, the single basic wage is $450, but workers receive an additional 40.3% in benefits. Proposing an increase without an adequate technical basis poses a threat to the creation of jobs and endangers existing jobs. pic.twitter.com/pbjlQSwC4R
— Fedecámaras Ecuador (@fedecámaras_ecu) December 5, 2023
And in the case of Ecuador, with a single basic wage of $450, “workers receive an additional 40.3% of benefits, the union indicates.”
“Wage increases that are not based on technical standards can seriously affect companies and the development of the country. In order to employ more, we must have a country that has a better economy and that does not put us at a competitive disadvantage compared to other countries,” commented Tania Pazmiño, representative of the employer sector before the National Salary Council.
And he assures: “we have no more work to do with higher salaries.” And he comments that in the last fifteen years the basic salary has increased by 165%, from 170 to 450 dollars, “while employability is at -18 percent”.
The increase proposed by the business sector was $4.12, adapting to the methodology established in the Ministerial Agreement no. 185 of October 19, 2020, issued by the Ministry of Labor, whose formula regulated in the agreement “includes technical parameters and aspects defined in the study conducted by the World Bank.
But failing to reach a consensus with the workers proposing a $100 raise, the employers invoked Article 118 of the Labor Law to apply it now that the Ministry of Labor is deciding on it.
Article 118 of the Labor Law establishes that if a consensus is not reached in the National Council for Labor and Wages, “the Minister of Labor will determine them in a percentage increase equivalent to the expected consumer price index, determined by the entity.” in purpose.”
The predicted inflation for 2024 is 2.07%, so the company’s current position is that the increase cannot be higher than 9.32 dollars. Estimates of both inflation and economic growth are officially given at the first session of the Council.
If the Government hadn’t changed in advance due to the death of the cross, the 2024 increase would have been $25 again because Guillermo Lasso raised that figure for 2022, 2023 and would do the same in his second two years in office to fulfill his campaign bid raise the base salary from $400 to $500 during his administration.
However, on November 23, there was a change of command, and thus the decision to increase salaries is now in the hands of the new government. The new Minister of Labor, Ivonne Núñez, will announce it by December 22, 2023.
Colombia must reach an agreement by December 15
As the fifth meeting of the 2024 minimum wage negotiating table took place in Colombia this Thursday, the parties awaited inflation data for November to continue discussions.
The increase set there for 2024 must be based on annual inflation (10.48% in October), and to this figure must be added the productivity figure for 2023, which the National Statistics Office (Dane) has determined as total factor productivity (TFP) at -1%, labor productivity per hour at 0.76% and labor productivity per employed worker at -0.7%. This is reported by the Colombian media.
December 15 is the legal deadline for the parties to agree on the amount of the minimum wage. But the final decision must be made by December 30.
Grupo Bancolombia’s calculations predict that annual inflation in November would be 10.2%, so when productivity is added to that, the increase would be at least 11%, and so it would go from 1,160,000 Colombian pesos to 1,287,136 pesos, which in dollars would be a jump of 290 up to 322 dollars.
In Peru, the increase will have to wait until the first months of 2024
In Peru, the basic wage has been unchanged since May 1, 2022, when it was adjusted by 10% to 1,025 soles (about $272.79), according to Bloomberg.
Although the government has made official the salary increase for healthcare workers since December, the general minimum wage will have to wait. In late November, Labor Minister Daniel Maurate told the media in his country that the increase in the minimum wage would be reviewed in the first months of next year.
This is because of the recession that Peru is going through. “The Minister of Economy indicated that in the first quarter of 2024 we must recover GDP. Then the time will come when we will put the issue before the National Labor Council to evaluate the increase of the minimum vital allowance.
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