Economy

Minimum wage: Colombia, Ecuador, and other Latin American countries have already defined new values for 2022

Colombia made the biggest adjustment in recent years, but the final value is still below the minimums defined by law in countries like Chile and Uruguay

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  • The value serves as the basis for formal employment contracts in these countries;
  • In Brazil, the minimum wage will be BRL 1,212, the highest since 2016, with an increase of 10.18%;
  • But a comparison shows that Latin America’s largest economy has one of the lowest minimum wages of the region.

Some of the largest economies in Latin America have already started to announce minimum wage adjustments for 2022. The value serves as the basis for formal employment contracts in these countries.

In Colombia, the minimum wage will go from just over COP 908,400 to COP 1 million, plus COP 117,172 for transportation vouchers, totaling COP 1,117,172.00 – around $279.10 per month. Although it has been one of the largest readjustments in recent years (10.07% Y-o-Y), the Colombian minimum wage is below that of other countries in the region, such as Argentina and Uruguay (see a comparison at the end of this text).

READ ALSO: Latin America’s two largest economies struggle with lingering inflation

In Brazil, the minimum wage went from BRL 1,045 to BRL 1,100 from 2020 to 2021 – slightly above what was provided for in the 2021 Budget Guidelines Law, but still within the estimates for the National Consumer Price Index (INPC), the inflation index used by the federal government for the readjustment. In 2022, the minimum wage will be BRL 1,212, the highest since 2016, with an increase of 10.18%. In Brazil, the raise of the minimum wage also serves as a calculation basis for the readjustment of the benefit of retirees and pensioners who receive the minimum retirement value in the country.

READ ALSO: As hopes for an IMF deal grow, so do fears of belt-tightening in Argentina

In Mexico, the minimum wage for workers is defined by the Council of Representatives of the National Minimum Wage Commission (Conasami, in the acronym in Spanish). The body met on December 1st and decided that the general minimum wage will be increased from MXN 141.70 to MXN 172.87 per day. In the so-called free trade zone, in the North of the country, the value of the minimum wage will go from MXN 213.39 to MXN 260.34 per day.

The increase in the general minimum wage in Mexico is composed of the minimum wage in force in 2021, plus the sum of the Independent Recovery Value (MIR), a component created by the Board in 2017, of MXN 25.45 for the free trade zone and MXN 16.90 for the rest of the country, in addition to an increase by fixation of 9%. Monthly, most Mexicans will have a minimum wage of around MXN 5,533.21.

If confirmed, the 10.04% raise for the minimum wage in Brazil will be the largest since 2016.

For comparison purposes, we converted the value of the minimum wage in some Latin American countries to dollars. In some, there has not yet been an official adjustment for 2022:

  • Uruguay – $ 499,32
  • Ecuador – $425
  • Chile – $396.89 (value of 2021)
  • Paraguay – $337,1 (July, 2021)
  • Argentina – $313.45 (2021)
  • Colombia – $279,10
  • Mexico – $264,38
  • Peru – $229,81 (valued determined in 2018, when the last correction was made. A new one is expected for 2022)
  • Brazil – $212.7 (2021)

Exchange rate for December 16, 2021.

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