An extraordinary leap of 23.78% in the Colombian minimum salary per month brings it to a symbolic COP$2,000,000

An unprecedented hike in the Colombian minimum salary for 2026 was announced on Monday 29 December, bringing the rate to two million pesos per month. That represents an increase of 23.78% on the 2025 number. That’s the biggest jump ever – only 1997 comes close in recent years with 21.02%.

The minimum salary itself (SMMLV or Salario Mínimo Mensual Legal Vigente) has gone up to COP$1,750,905. There is also a transport subsidy (COP$249,095) which brings the effective minimum salary in Colombia for 2026 to two million on the nose.

Business leaders had suggested a rise of around 7.21%, keeping it above annual inflation (5.3% as of November), while trade unions and syndicates had called for an optimistic 16%. Both were left in the dust by Petro’s extraordinary decision.

The extraordinary rise is not due directly to inflation, nor to the rising cost of living, but represents a fundamental change in the rationale behind the number. Colombian president Gustavo Petro explained that the minimum salary should be considered a household income, not individual. He calls this salario vital, or salario digno.

Whether the household basis for the minimum salary holds up to scrutiny is hard to say. It certainly was the case, but like most other middle-income countries Colombia is rapidly changing. The idea of a single income supporting a family is less true every year, with Colombian households under 3.5 people on average and with 1.5 workers. That means a true dependency ratio of nearly one to one.

It was calculated by working around the price of a basket of goods for the average family (canasta básica), logged at nearly 3 million pesos for four people. Using that number of 1.5 workers gave the convenient round number of two million.

The minimum salary (not including the transport subsidy) is the baseline number that in turn influences a whole lot of other values in Colombia, such as fines and public salaries which are counted as multiples of the SMMLV. That includes, happily for Congress, politicians’ pay.

What does the increase in the Colombian minimum salary mean for the economy?

Far harder to work out is the long term impact of this rise in the Colombian minimum salary. Petro claims it will further stoke private spending in the country as the increased wages percolate throughout the economy and allow continued growth.

https://twitter.com/MintrabajoCol/status/2005795577548923288

It will increase labour costs for a number of businesses, especially small companies, some of which will struggle to keep their heads above water with such a sudden rise in payroll. For medium and larger size businesses, this includes mandatory SENA apprentices.

Note that payroll costs for employers will increase by more than the 23.78% headline figure, as they have to make social security payments based on an employee’s wage as well as the wage itself.

Massive firms who are liquid enough to be able to absorb costs will likely be absolutely fine, even if there are a couple of high-profile exceptions. Companies that are dodging the system, either through informal working or false self-employment, will also likely thrive.

Of course, the new reforma laboral promises to regularise and/or eliminate such practices. On paper, that is. In reality, these are the potential counterintuitive effects that could be the legacy of this increase in the Colombian minimum salary.

Colombia saw a sharp downtick in the number of employees on minimum salary this year, while informal work and self-employment has risen to around 55% of the workforce. This trend could continue much more rapidly with companies unwilling to pay the high new Colombian minimum salary.

A further issue is how close the minimum salary is now to the average. This will particularly affect smaller businesses and recent graduates. The former will find it hard to offer salaries that are significantly above minimum to attract quality employees, while the latter will find themselves often close to minimum salary and waiting longer for a return on their studies.

It is worth remembering that both minimum salaries themselves and increases to them are often bitterly opposed the world over and predictions of chaos are frequently sown. In most cases there is short term turbulence followed by long term stability. 

Is this a political power play?

Despite Petro’s official line about household incomes, many will see this as a nakedly political move ahead of next year’s elections. It certainly will play well among the Colombia Humana base and potential voters as a reason to keep faith with the left and cast their vote accordingly next year. 

A more charitable view would be to say that it’s one of the last significant acts that Petro can take before leaving office, so he’s gone big to deliver an achievement. Those have been in short supply over his time in the Palacio Nariño.

What’s undoubtable is that this creates a massive headache for next year. Regardless of who takes power, they won’t be expected to deliver quite such a large rise. However, they will have to be careful how far they go below it.

Any successor to Petro will at least be able to say their allies prepared the ground and maybe get away with a modest increase. An incoming fiscal conservative will be under pressure to deliver another big increase against their natural instincts and take heat for not doing so, while actually cutting the rate would be close to political suicide.

While a lot of candidates in the 2026 election might say that this was a fiscally imprudent move, they will have to be careful how far they push it. Many in Colombia will agree with them, but those same people are also likely benefiting from the increase. 

There are also the optics of a rich politician arguing against the very many voters who are on minimum wage or even those who aspire to earn minimum wage. It’s not a good look to argue against giving stuff to the people whose vote you want.

Short term gains, but long term problems?

So in the end this is a huge play from Petro, which has won him a useful political victory for today. It backs up his rhetoric, as he can easily claim he’s acting on behalf of the workers. There’s plenty of truth in that, as many Colombians work on minimum wage.

It may be a bribe to the electorate, but many will claim that no one else has at least offered them anything like this ever before, so good on him. Going into the 2026 election candidates on Petro’s side will be able to point to this achievement, while opposition candidates face pressure to offer at least something similar or be painted as rich folk denying the poor.

It’s hard to see a short term in which we won’t see a lot of businesses go bankrupt. The longer term is harder to read, as most companies will be unhappy but able to keep going. The effect on public salaries is potentially alarming with the state already running a deficit, unable to achieve fiscal reform and still expanding.

Ironically, it’s entirely possible that the increase in the Colombian minimum salary for 2026 might lead to more informality and less dynamism in the economy. However, it’s also completely believable that the economy is resilient enough to handle it with ease. This may be Petro’s biggest gamble yet and even he doesn’t know how it’ll play out. 

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The United States today classified the Gaitanist Army of Colombia (EGC), Colombia’s most powerful armed group, a foreign terrorist organization (FTO).

The EGC, or Clan del Golfo, has expanded its criminal enterprise in Colombia in recent years, consolidating control over lucrative illicit economies like cocaine and illegal gold mining, as well as extorting large-scale enterprise.

While its designation as an FTO could assist authorities in unravelling the organization’s financial structure, analysts say it may threaten ongoing peace talks in Qatar between the EGC and the Colombian government.

“Today, the Department of State is designating Clan del Golfo as a Foreign Terrorist Organization (FTO) and a Specially Designated Global Terrorist (SDGT),” wrote Secretary of State Marco Rubio in a statement on Tuesday morning. 

“Based in Colombia, Clan del Golfo is a violent and powerful criminal organization with thousands of members. The group’s primary source of income is cocaine trafficking, which it uses to fund its violent activities,” continued the memo.

Who are the EGC?

The EGC was born from the remnants of the United Self-Defense Forces of Colombia (AUC), a paramilitary group responsible for grave human rights abuses in the late 1990s and early 2000s.

Since then, it has re-branded itself several times; for a time it called itself the Urabeños, then the Clan del Golfo, honoring its heartland in the Gulf of Urabá in northern Colombia; it later changed its name to the Gaitanist Self-Defense Forces of Colombia (AGC); most recently, the group adopted the EGC moniker. 

In recent years, the group has argued that it is a political actor in Colombia’s decades-long internal conflict, but its origins were strictly focused on making money illicitly. 

In the past decade, the organization has rapidly expanded beyond northern Colombia into as many as 20 departments across the country, exerting control in both rural and urban areas. 

“On the one hand, the group is an organized crime structure that manages various legal and illegal businesses and, on the other hand, it has also formed a uniformed army,” explained Gerson Arias, conflict and security investigator at the Ideas for Peace Foundation (FIP), a Colombian think tank.

Today, the group counts between 3,000 and 3,500 uniformed troops among its ranks while it has a further 6,000 members who form part of its broader crime structure of extorting businesses, according to Arias. 

“The main threat facing Colombia today is represented by the Clan del Golfo and its military and economic structure, both legal and illegal,” the analyst told The Bogotá Post.

What does the FTO designation change?

Following Washington’s sanctions, anyone deemed to be providing material support to the EGC can be brought to trial in a U.S. court. 

“Not only could cases be brought against members of the Clan del Golfo, but against any businessmen, facilitators, logistics operators, or anyone who provides even something as simple as buying them a meal,” explained Elizabeth Dickinson, Deputy Director for Latin America at International Crisis Group.

She told The Bogotá Post that the FTO designation could therefore “open some interesting doors” by exposing links between the EGC and legal enterprise, adding “this is an organization that has deep tentacles in the business world.”

The move could also provide a pretext for military action against the EGC in Colombia, with the Trump administration saying in recent weeks that drug production in any country is a legitimate target.

“An FTO in and of itself is not a justification for military action. However, it has historically been a step along the road to paving a narrative politically that could lead to the U.S. considering military action,” said Dickinson.

Impact on peace negotiations

In September, the first round of negotiations took place between EGC and Colombian state negotiators in Doha, mediated by the Qatari government.

A second round in December led to the signing of a “commitment to peace”, with the first step towards demobilization planned for March 2026. 

But the State Department’s FTO designation threatens to derail talks, according to analysts.

“I think there’s a lot of pending questions right now about the future of negotiations with this group,” said Dickinson. 

She stressed the progress made in talks so far, including a commitment to take a census of children fighting in the ranks of armed groups and return them to the state.

FIP’s Arias warned that the FTO classification will complicate both the subject of talks and the logistics of engaging in negotiations.

He noted that EGC negotiators will struggle to attend talks safely outside of Colombia and that Colombian authorities will be unable to provide credible non-extradition guarantees to the group’s leaders.

But Dickinson warned of the dangers of ending negotiations: “This organization is the largest threat to peace and security in Colombia. I think it will be important for the Colombian authorities and their country partners in mediation to consider what could be the implications of if peace talks were to end.”

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