Colombians question wage boost, fear rising costs

Colombians expressed skepticism on Tuesday, December 30, after President Gustavo Petro announced a historic 22.7% increase in the minimum wage, raising concerns about whether the boost would truly improve their lives amid fears that rising inflation could erase the gains.

The new minimum wage will be 1.75 million pesos ($470) per month, covering around 2.5 million workers, and will take effect in 2026. This represents a significant jump from this year’s 9.54% increase.

On the streets of Bogotá, residents voiced worries that the wage hike could lead to higher prices across the board.

"I think it's going to affect us because as he raises the salary, everything will go up, and it affects us in everything," said Jackelin Pinzon, who works at an arepa street food stall.

President Petro said the measure is intended to reduce inequality and "democratize wealth so that working people, who make up the majority of the Colombian population, can live better."

Economic analysts, however, cautioned about potential negative effects. David Cubides, chief analyst at Banco de Occidente, described the increase as "negative for the country," noting that rising costs could hurt informal workers and those earning less than the minimum wage.

Cubides also warned that worsening fiscal conditions could lead to higher interest rates and reduced government spending on infrastructure and health.

The wage hike, announced by decree after negotiations between business associations and trade unions failed, surpasses the central bank’s 3.6% inflation projection for 2026. Petro acknowledged that the move could put additional pressure on inflation.

Production: Javier Andres Rojas, Herbert Villarraga, Liamar Ramos/Reuters