The destruction of formal employment
Although only two months have passed since the new minimum wage, with a 23% increase, came into effect, the effects of formal job destruction are already being felt, which was timely warned to the national government and was easily predictable for any layman.
TL;DR
- The 23% increase in Colombia's minimum wage has resulted in the destruction of 149,000 jobs in Commerce and vehicle repair within 31 days.
- Other sectors affected include Accommodation and food services (109,000 jobs lost) and Real estate activities (39,000 jobs lost).
- Cartagena's unemployment rate has risen to 14.6%, with youth unemployment at 25.3%, and informality exceeding 50%.
- The increase in formal employment has been driven by the public sector (Administration, Defense, Education, Health), possibly through service provision orders, rather than organic market growth.
- Analysts warn that the minimum wage hike may be replacing productive private employment with tax-funded bureaucratic employment and hindering formalization.