The Autonomous Fiscal Rule Committee (Carf) warns that the recent 23% minimum wage hike to $2 million—decreed on December 30—could cost $5.3 trillion in 2026 (0.3% of GDP), complicating fiscal sustainability. Labor Minister Antonio Sanguino announced plans to desindex key goods from the wage and provide SME relief to curb inflation.
As detailed in initial coverage of Decree 1469, the 23% increase follows failed talks in the Minimum Wage Commission and aims to address dropping inflation (to 5.2%), 7% unemployment, and 2.9% growth. However, Carf technical director Juan Sebastián Betancur Mora highlights an 18.5% real rise—far above the 1.2% historical average—projecting $4.7 trillion in pension costs and $0.6 trillion in public salaries next year, plus $8 trillion deficits from 2027 including lost tax revenue. Unquantified impacts hit annuities and state contracts.
Sanguino outlined an early January decree to desindex 14 remaining items (e.g., VIS/VIP housing) from the wage—adding to 225 already decoupled—plus credit lines, tax relief for SMEs, and crackdowns on speculation. Analysts warn of rising informality (56%) and microenterprise costs (59.9% labor hike for 91.7% of firms), with Barclays' Jason Keene noting price controls may unsettle markets amid falling dollar bonds.
