Petro orders huge minimum wage increase in Colombia
Tuesday, December 30th 2025 – 09:42 UTC
Petro’s move has been regarded as a farce to condition next year’s vote
Colombian President Gustavo Petro announced on Monday a historic 23.7% increase in the minimum wage for 2026, making it the largest upward adjustment in 25 years. The measure includes transport subsidies.
As per the President’s decision, the new minimum monthly salary climbed from 1,623,500 Colombian pesos (US$422) to 2,000,000 Colombian pesos (US$520), following other significant hikes under Petro, including a 16% jump in 2023, totaling a 42.4% cumulative increase over the last three years.
Petro and Labor Minister Antonio Sanguino framed the move as a way to reduce inequality and protect the purchasing power of the working class. They argued that salaries must guarantee dignified living conditions, citing a constitutional mandate for a vital wage.
With inflation projected at 4% for 2026, experts warn that a 23.7% wage hike will force businesses to raise prices, potentially creating a vicious cycle. Additionally, nearly 50% of Colombian workers are currently in the informal sector, fueling analysts’ fears that high labor costs will prevent small businesses from hiring by the book.
The announcement comes just one week after Petro declared a 30-day State of Economic Emergency due to a fiscal gap of approximately US$4.2 billion, following Congress’s rejection of his tax reform bill.
Furthermore, Colombia is headed for the May 31 Presidential Elections. While Petro himself is constitutionally barred from re-election, critics view this aggressive wage increase as a populist move to bolster support for his political movement ahead of the polls.
Experts from the Universidad Javeriana and the Fiscal Observatory warn that this wage increase adds roughly 10 trillion Colombian pesos per year in public spending, primarily because public sector salaries and pensions are legally tied to the minimum wage, also triggering a massive pay raise for high-ranking officials and lawmakers, thus contradicting Petro’s discourse on reducing inequality.
The Colombian Central Bank (BanRep) had projected 2026 inflation at 3.6%. Economists now fear this shock to the economy will force the bank to keep interest rates high to combat a new inflationary wave, potentially stifling the projected 2.6% GDP growth.
Business associations have reacted with outrage, calling the negotiation process a farce, around which the 2026 is expected to revolve.
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