Colombian trade unions have been understandably disappointed at the minimum wage the government had set up for nearly four million Colombians whose subsistence depends on such figure. During the negotiations on mid-December the industrialist offered a 7 per cent increase while the unions sought an increment of 12 per cent. Since there was not agreement after the industrialist arrogantly left the meeting the government decided to increase the minimum wage by a mere 7.67 per cent, which is equal to the inflation for 2008. More astonishing still is the decision by the electricity companies to — only a few days after the raise — increase their bills by 7.67 per cent, effectively adding to the poorest economic troubles.
The government alluded to the current economic crisis for their decision, fearing that a higher increment would affect export-related industries. However, exports will definitely be affected given that the US is Colombia’s biggest export market. This should be a wake up call for restructuring the economy but the government is oblivious to what the current economic crisis signifies for the liberal economic philosophy.
Countries are moving assertively to reverse free trade policies dictated by International Organizations such the World Trade Organization and the International Monetary Fund. Even amid the economic crisis the IMF insisted on increasing spending on social safety nets before handing out loans to Pakistan, Ukraine and Hungary; a complete U-turn. However in Colombia, the government protects foreign and elite business interests, instead of taking into account the effects of barely subsistence level wages in the local economy.
Small and medium size enterprises would benefit greatly from Colombians higher purchasing power. Small and medium size businesses’ demand comes from the local population and such business are largely owned by locals. Governments around the world are seeking ways to increase local demand in order to support the local industries. Given that Colombia’s imports correspond to roughly 20 per cent of the total Gross Domestic Product, a higher increase in the minimum wage would certainly benefit the local economy.
These borrowed policies that advocate for the most minimum rise in wages only apply to authoritarian governments whose economies are at the mercy of global demand. Indeed, such policies benefit the families controlling the economy in Colombia and the foreign investors that are responsible for the Foreign Direct Investment that the government so enthusiastically publicizes.
The government appears to be more interested in protecting the profitability of certain individuals. These policies benefit neither the vast lower class nor the small Colombian middle class. Such contempt towards the poor, from the industrialist and the government, is nothing new. Something similar occurred with the indigenous leaders (Minga) when Uribe desisted from formally meeting them to understand their grievances.
demonstrate how alienated the government is from the realities that nearly four million people face. When most of the government ministers have been educated in top US universities and have PhDs in economics and MBA’s is understandable the interest that they would side with.
In Colombia most of the people are categorized as poor yet the government does not take into consideration their grievances. The government is more concerned with protecting the profits of foreign business owners and Colombia’s elite, in case exports fall dramatically, by not increasing the wages of the poorest in real terms.
This redistribution of wealth to the wealthy does not increase local demand; the richest few are not able to spend more money unlike the poorest lot. Even with such damaging policies the majority of these four million people appear to have voted for the policies of the current government. An ironic situation but a situation that can change now that the government’s results in many fronts appear tainted and more vividly reflect the interest they are protecting.
Author Sebastian Castaneda is Colombian studies psychology and political economy at the University of Hong Kong