Colombia is likely to increase its minimum wage more this year than last year after separate proposals Monday by labor unions and business leaders each surpassed the 4% rise set a year ago.
The expected sharper increase in the minimum wage, a level that is also the main reference point for many other salaries and payments such as speeding tickets, comes as Colombia battles with inflation rates that are slightly above the central bank’s target range. The monthly minimum wage currently stands at 535,000 pesos, or about $276.
Unions led by the workers’ federation known as CUT called Monday for an 8% increase to the minimum wage in 2012, noting that while the broad consumer price index could be around 4% this year, staple goods that better reflect the purchasing power of the working class will rise much more. Food prices, the unions said, are likely to rise 6.6% this year, while fuel, transport and utilities will rise nearly 7%.
Business leaders led by the Association of Industrialists, or ANDI, are asking for a 4.75% increase in the minimum wage, according to a statement on ANDI’s website. It said it came to this figure by looking at annual CPI averages and adding one percentage point for “productivity.”
The government usually sets the minimum wage increase for the following year shortly after Christmas. It holds weeks of meetings with business leaders and workers, and tries to choose an increase that satisfies both sides. Economists caution the government to avoid raising the minimum wage by too much, as this could fuel expectations of higher inflation.
Annual consumer price inflation through October was 4.02%, just above the central bank’s 2%-to-4% target range and well above 2010’s CPI of 3.17%. This led the central bank in late November to hike interest rates for the first time in four months, in an effort to cool inflationary pressures.