Gustavo Petro announces a historic increase in the minimum wage in Colombia, triggering a shower of criticism in the middle of the election campaign

The President of Colombia, Gustavo Petroannounced this Monday an unprecedented 23.7% increase in the “living minimum wage,” set at two million pesos (about $535) for 2026, the highest in this century. The decision, with which the government promises to improve the quality of life of the population, immediately triggered strong criticism from business, which described the measure as unsustainable.

Petro’s decision shook up the political scene, which was already beginning to accelerate the race for the presidential election in May 2026. There were strong reactions from across the political spectrum. Analysts and opposition politicians warned that this was a measure with no technical basis and was apparently aimed at counteracting the negative image of the left-wing president, who, after several waves of protests against his government in the last two years, is entering the end of his term in office very exhausted and with a significant loss of image.

“We have moved to a minimum family subsistence wage of 1,746,882 pesos (about $468), an increase of 22.7% compared to this year, which is not yet over,” plus nearly 250,000 pesos (about $67) in transportation subsidies, making two million pesos, the president announced in a message to the country.

This is the largest salary increase in the last 25 years. The highest value to date was recorded in 2023 (16%).

“With these measures we want to reduce inequality,” although “there will be pressure on prices,” admitted Petro in his speech with Labor Minister Antonio Sanguino.

According to the president, “the increase was calculated not only on the basis of indicators such as inflation and productivity, but also others that allowed for a more equitable increase and guaranteed better living conditions for workers and their families.”

The 23.7% increase in the minimum wage was decided unilaterally by the government after negotiations failed tripartite with representatives of employers and trade unions.

“From now on, let Colombia talk not only about the minimum wage, but also about a minimum wage for the subsistence of the family, and so we have done the calculations,” emphasized Petro, who even mentioned the encyclical “Rerum Novarum” written in 1891 by Pope Leo XIII. was announced.

Several economists warn against this The increase could have a negative impact on inflation, informality and cost of living. on the rise in the country.

“An increase well above inflation is a boost that will not last because it translates into higher inflation and has a macroeconomic effect that would destabilize the Colombian economy,” Jorge Restrepo, an economics professor at Javeriana University, told AFP.

In Colombia Inflation is estimated at around 4%. for next year, according to the Bank of the Republic (center). Other estimates put it at just over 5%.

According to figures from the government statistics agency DANE, almost 50% of Colombian workers, most of whom work informal jobs, do not earn a minimum wage.

Business owners also raised their voices against this salary increase. “A unilateral decision by the government creates major risks for households and the Colombian economy, especially related to the impact on inflation and the prices of many goods and services, on employment and even on public finances,” said the president of the National Association of Businessmen of Colombia (ANDI), Bruce Mac Master, in a statement.

The Chairman added: “Inflation is undoubtedly one of the variables that most affects the most vulnerable citizens,” noting that “at a time when the government has told us that it is in ‘economic distress,’ it is estimated that every 1% increase in salaries generates additional public spending of 400,000 million pesos (about 107,000 million dollars).”

For his part, the president of the National Federation of Merchants (Fenalco), Jaime Alberto Cabal, explained that the increase in the minimum wage for 2026, well above the inflation rate, will also have negative consequences for employment.

“This irresponsible act of the national government to raise the minimum wage at an unprecedented exorbitant rate, many times higher than inflation, will have very serious consequences for the economy and for the workers themselves, who will be threatened by the high cost of these jobs,” which will ultimately lead to an increase in informality.

For his part, Fabio Arias, president of the Central Unitary Workers union – one of the largest in Colombia – accused businessmen of regretting that “working people could do well.”

According to the Ministry of Finance, the cumulative increase in the minimum wage under Petro’s mandate over the past three years was 42.4%.

The national economy is exceeding analysts’ forecasts, who expect GDP to increase by between 2.6 and 2.7% by the end of the year.

Last week, Petro declared a 30-day economic state of emergency amid an “imminent financial crisis.” after calls from international organizations for the left executive’s attention to the country’s financial health.