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As 2025 draws to a close, the discussion over the 2026 minimum wage has taken an unexpected and worrying turn. A draft has circulated in the corridors of the Ministry of Labor and in various technical sectors that suggests an increase of 23%, a figure that would break any recent historical precedent and would place the basic salary at approximately $1,746,882 (not including transportation assistance).

Although the intention of the National Government, under the premise of the “living wage”, is to improve the purchasing power of workers, the economic reality of the country presents a much more gloomy scenario. Guilds like Fenalco and think tanks like Fedesarrollo agree on a lethal diagnosis: a disproportionate increase would not generate more wealth, but rather would push millions of Colombians into “scavenging.”

The concept of the “Living Wage” vs. the reality of the box

The 23% proposal is based on the standards of the International Labor Organization (ILO), which suggest that a worker should earn enough to cover housing, health, education and food in a dignified manner. From this perspective, the Government estimates that the minimum should exceed $1.8 million.

However, economists and researchers point out that applying this “sudden” adjustment in 2026 would ignore the low productivity that the country has recorded. In 2025, labor productivity closed with figures close to zero or even negative in some quarters. Raising salaries by 23% when productivity is not growing is, in technical terms, an imbalance that companies end up paying for with personnel cuts.

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The “Boomerang Effect” in Labor Informality

The most severe impact of a 23% increase does not fall on large corporations, but on micro, small and medium-sized businesses (SMEs), which generate more than 80% of employment in Colombia.

Why is informality increasing?

Non-salary costs: In Colombia, hiring someone formally costs an additional 53% on the basic salary (health, pension, risks, parastatals). With a 23% increase, the total cost per employee for a microentrepreneur would jump unsustainably.

Entry barrier: Thousands of commercial establishments, restaurants and hair salons do not have the profit margin to absorb a double-digit increase. The option for many will be to go to the “gray payroll” (pay below the minimum or without social security).

Moving to the search: According to DANE figures, informality in Colombia is already around 56%. An increase of 23% could take this figure above 60%, condemning workers to jobs without social protection or stability.

The experts’ warning: Economic “suicide”?

Experts from the National University and Fedesarrollo have been emphatic: a minimum wage that is far from projected inflation (which by the end of 2025 is estimated to be around 5.3%) generates an inflationary spiral.

“If the salary rises by 23%, the prices of basic goods and services will rise immediately to compensate for the labor cost. In the end, the worker will receive more bills, but will be able to buy the same or less,” explain financial analysts.

In addition, labor-intensive sectors such as private security, cleaning and commerce would see their operating costs skyrocket, which would force them to renegotiate service contracts that are indexed to the minimum, making the lives of all citizens more expensive.

The Crisis Algorithm: What will happen to your pocket?

For the average citizen, this increase not only means a possible adjustment in their salary, but a “cascade” of increases in:

Contributions to health and pension for independents (which automatically increase with the minimum).

Traffic fines and notarial services.

EPS moderating fees.

Leases, which although are governed by inflation, are often pressured by market liquidity.

A 23% increase might seem like a social victory on paper, but in practice it threatens to become a poverty trap for those who today struggle to remain in formality. The Colombian economy needs a balance that protects the worker’s pocket without suffocating the employer who pays taxes.

They filter a decree that would confirm what the minimum increases for 2026: in this case it remains with transportation aid

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