The minimum-government

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What made the fluidity with which the minimum wage was agreed this year feasible, something that had not happened for ten years? The Dane registered an increase in the prices of food and beverages by 15.34% and in gas, energy and fuels by 10.34%, the increase in inflation for 2021 is calculated to reach 6%. The items that hit the workers, the middle classes and the poor the most are the first two, which, as can be seen, are well above the 10.07% agreed figure of the minimum wage. For business representatives, the economic outlook of the country was influenced by the accelerated rebound of the economy and they present the figures of the salary increase as their gesture of solidarity, but at the same time they recognize that the traditional recipe of sticking to inflation figures and referring to the The relationship between the demand for employment and the minimum wage has not been successful.

The natural experiments of David Card, Nobel laureate in economics 2021, who together with Alan Krueger who died in 2019, showed that the minimum wage does not necessarily force employers to cut jobs and on the contrary stimulates aggregate demand. The empirical analysis of Nobel 2021 showed the lack of correspondence between high wages and discouragement of employment. These studies have influenced minimum wage increases in various economies around the world.

In the Colombian context, there are several factors to take into account in the government’s decision to anticipate proposing an increase in the minimum wage of 10.07%, which was finally accepted by employers and workers. Let us remember that Carrasquilla, prime minister of finance of the Duque government, very recently declared without shame that the minimum wage in Colombia was ridiculously high; How then to explain the Duque government’s decision? It is difficult not to think that the disapproval of Duque, the large mobilizations of November 2019, the prolonged national strike in April and the social outbreak do not hang at the head of the government and businessmen. These events caused a shock to the economic establishment, the unions and the government and their customary intransigent positions on the issue of wages.

Another factor that is sure to be influencing and will continue to do so in the coming months is the Petro phenomenon that leads all polls, so much so that several firms and analysts already put it in the second round. The establishment trembles before the possibility of a triumph of the candidate of the historic pact and a congress whose composition is favorable for its governance. It is reasonable to infer that the government’s actions: the good ones like the minimum wage, the bad ones like the attempts to gag the press and the cheats like the suspicious behavior of the registrar, among others, will be aimed at preventing the loss of the leadership of the State and in particular to avoid at all costs a triumph for Petro and his historic pact.

All the candidates on the right have very low acceptance rates so far. What would make these political currents finally be traded for the Centro Esperanza candidate that modulates and slows down the changes that Colombia needs.

This column returns on January 31st. Good living in 2022.

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The minimum-government