Up to 30% of SMEs Could Disappear Due to Increased Costs After Reduction of Working Hours
Labor costs will affect SMEs in Colombia. Photo: Circular Vision of ANDI
TL;DR
- A reduction in the weekly workweek to 42 hours and an increase in holiday work surcharges are expected to significantly raise hourly labor costs in Colombia.
- Up to 30% of SMEs in Colombia could disappear due to these increased labor costs, exacerbated by high interest rates and inflation.
- Businesses in sectors like retail, hospitality, and transportation, which rely on extended hours, will be immediately impacted.
- While intended to improve worker quality of life, the changes may lead to reduced overtime and night shift work, potentially decreasing employee variable income.
- Around 40% of companies have already reduced night, Sunday, or holiday operations, and 71% anticipate job cuts, indicating the impact is already being felt.
- Micro and small businesses are particularly vulnerable due to a high proportion of minimum wage earners and limited flexibility to absorb increased fixed costs.