Policy of minimum wage in Colombia. A reading between theory and reality

Abstract

The minimum monthly wage (SMMLV) in Colombia is analyzed since its fixation policy framework and its effects on the real purchasing power of workers during the period 1950-2009, and using basic conceptual principles of the Theory of Revenue. The results show that the SMMLV force in 2009 ($496,900) was in real terms slightly higher than 40% respect the first established in 1950 ($60), in turn equivalent to the average annual rate of inflation experienced during the period, which means that, despite the settings approach has been made, the wage policy applied in the country during the past 59 years has served, at best, to maintain the purchasing power of workers perceiving the (MMW), as well as, all those who have adjusted their monthly payment based on the latter, in practice the majority of Colombian workers. The negotiating policy On MMW in Colombia is based on processes of consultation between workers, producers and Government focuses exclusively on the wages question, without any explicit reference about the employment (unemployment) conditions in the country. It was therefore present some basic theoretical arguments about the practical implications of minimum wage policy in economies with high unemployment and Colombia. Therefore, as a complement, the document includes some theoretical arguments about the practical implications of applying minimum wage policies in economies facing high unemployment rates such as those currently present in Colombia.