Minimum wage 2026: the calculation error that entangles the debate on productivity
The debate over setting the minimum wage has returned to the center of public conversation after the temporary suspension of the decree that increased it by 23.7% for 2026.
TL;DR
- Economists Leonardo Urrea and Christian Gómez Cañón argue the Colombian minimum wage debate suffers from a methodological error in comparing productivity and wages.
- They critique the use of Total Factor Productivity (TFP) and labor productivity (PIB/L) as flawed metrics for determining minimum wage adjustments.
- A key technical error identified is comparing hourly productivity (OECD data) with the real monthly minimum wage, which distorts the comparison.
- When comparing correctly (productivity per worker vs. minimum wage per worker), real minimum wage has increased significantly more than labor productivity per worker since 1994.
- The economists suggest that a more informed negotiation should consider sector-specific productivity, cost of living, informality, and company labor costs.