The IMF claimed Sunday that Colombia’s minimum wage is too high and not creating new employment.
The agency said that the minimum wage is a factor in unemployment and informal employment and was driving up the cost of labor.
The IMF argued that the wage should be decreased, closer to the current rate of inflation.
In 2010 President Juan Manuel Santos raised the minimum wage by 4% after the inflation rate unexpectedly jumped to 3.1%. The wage currently stands at about $300 a month.
Vice President Angelino Garzon vehemently denounced the IMF’s proposal, stating that it was “offensive to workers and the national dignity.”
Garzon further criticized the suggestion as focusing only on Colombia’s exports and ignoring the nation’s domestic economy. “The economy does not grow solely through exports but also with an increase in workers’ purchasing power,” said Garzon.
The vice president also said that lowering the minimum wage would go against the proposals of Santos’ presidential campaign.
The IMF went on to recommend increasing tax collection, close monitoring of Colombia’s credit market to determine if the economy is overheating and a forbearance of direct intervention in currency markets to keep the exchange rate of the peso flexible. The agency did recommend some currency regulation if the fluctuation of the peso creates significant instability in the economy.