Santos said that the government is determined to change the current labor market realities which he considers “disturbing” due to the high rate of unemployment and lack of formality.
“Almost 60% of workers in Colombia are not formally linked, that is to say they have no paid vacations do not receive bonuses, severance pay, health care, pensions and are not members of family compensation fund,” Santos said.
As part of a plan to combat unemployment, the government will offer tax deductions for companies that hire youths, elder people, and the alter-abled or people in a state of vulnerability.
“Companies can take deductions from their income tax — for two or three years — according to the value of the fiscal contributions that they give to their workers, and a percentage of the health care contributions and pensions,” the president said when presenting the Law for First Employment at a special event at the presidential palace.
Businesses, large and small, can enjoy the incentives if they offer jobs to people who fit the profile outlined in the law. “Young people under 28, women over 40 who don’t have a job contract, women who are heads of the family living in poverty levels 1 and 2, demobilized persons, people with disabilities, persons in situations of displacement, or anyone who earns less than 1.5 times the minimum wage and people who have not had a salary to contribute to social security before,” explained Santos.
The president added that an unemployment rate over 11% is “unacceptable.”
Colombia’s unemployment rate dropped slightly in 2010, ending the year with a 11.8% , 0.2% lower than January of 2009, according to the national statistics department DANE.
In June 2010 the president announced his intent to lower the unemployment rate to 8% primarily by offering tax breaks to employers.