The surprise ruling is a temporary win for employers, but creates even more uncertainty. The Council of State has ruled that Petro’s 23% raise in minimum wage violates technical limits established by law.

The Colombian Council of State has issued a provisional suspension of the government decree that established a 23% increase in the national minimum wage for 2026. The judicial decision halts the implementation of the adjustment, which had set the monthly salary at $1,750,905 COP plus a transportation assistance allowance, totaling approximately $2,000,000 COP.

The suspension follows several legal challenges arguing that the administration of President Gustavo Petro exceeded its authority by setting an increase significantly higher than the 5.1% inflation rate recorded in 2025. The court found reasonable doubt regarding whether the executive branch adhered to the technical criteria mandated by Law 278 of 1996, which requires adjustments to be based on inflation, productivity, and economic growth.

Immediate Regulatory Timeline and Compliance

The high court has granted the Ministry of Labor an eight-day window to issue a new provisional decree. During this period, employers are instructed to maintain current payment levels until the new administrative act is published.

Legal experts emphasize that the ruling does not have retroactive effects. Juan Pablo López, managing partner at López & Asociados, told daily El Tiempo that payments made between January 1 and the issuance of the new decree remain valid. Companies are legally prohibited from discounting or requesting the return of the additional 23% already paid to employees for January and the first half of February.

Vicente Umaña, partner at Posse Herrera Ruiz, clarified to the same publication that while payments currently due must honor the 23% increase, the forthcoming decree will likely establish a lower rate. This adjustment will subsequently impact other costs indexed to the minimum wage, including administration fees, fines, and transport costs.

Economic and Labor Market Projections

The initial 23% hike sparked concerns among economic think tanks regarding formal employment and inflation. Fedesarrollo published an analysis suggesting that such an increase could lead to the loss of up to 600,000 formal jobs and a three-percentage-point rise in labor informality.

Economic researchers at Bancolombia (BVC: BCOLOMBIA, NYSE: CIB) estimated potential job losses could reach 734,000. Their data highlights specific sectors at risk:

• Professional activities: 390,537 jobs
• Commerce: 71,917 jobs
• Construction: 54,537 jobs
• Manufacturing: 42,774 jobs

According to Medellín-based El Colombiano, Camilo Cuervo, partner at Holland & Knight, noted that the Council of State’s language suggests the original decree may not survive a final merits review. Luis Fernando Mejía, CEO of Lumen Economic Intelligence, indicated that the suspension could serve to stabilize price escalations observed in early 2026.

Business Community and Government Reactions

The National Federation of Merchants (FENALCO) and the National Business Association of Colombia (ANDI) have addressed the ruling. Jaime Alberto Cabal, president of FENALCO, described the suspension as a necessary correction to an adjustment that did not reflect economic realities. Bruce Mac Master, president of ANDI, stated that the ruling establishes important jurisprudence for technical responsibility in wage setting.

Mauricio Montealegre, partner at Pérez-Llorca Gómez-Pinzón, observed that while the government could theoretically attempt to justify the same figure in a new decree, the president has called for a new concertation table to align with the court’s criteria.

Guidance for Employers

Business owners and human resources departments operating in Colombia should consider the following steps:

• Maintain Current Payroll: Continue paying the 1,750,905 COP base salary until the new decree is officially published in the government gazette.
• Avoid Retroactive Deductions: Ensure that no attempts are made to recoup the 23% increase already paid to staff for previous periods.
• Monitor the New Decree: Prepare for a mid-month adjustment in the second half of February, as the new rate will apply immediately upon publication.
• Contractual Review: Assess contracts and service agreements tied to the minimum wage to prepare for downward adjustments in indexed costs if the new rate is lower.

Photo © Loren Moss

Colombian President Gustavo Petro on Sunday mounted a forceful defence of his government’s 23.7% minimum wage increase for 2026, pledging to issue a temporary decree to keep the so-called “vital wage” in place after the Council of State provisionally suspended the original measure.

Speaking in a televised address on Feb. 15, Petro said that while he disagreed with the high court’s decision, he would respect the judicial process and comply by issuing a transitory administrative decree, pending a final ruling.

“The vital wage will remain in place until the new decree is issued,” Petro said, rejecting claims that the increase had triggered inflation or job losses and insisting that workers’ purchasing power must not be subordinated to shifting economic variables.

The Council of State questioned the technical justification and procedural basis of the December decree that lifted the monthly minimum wage to 1.75 million pesos ($470) – close to 2 million pesos including transport subsidies – forcing the government to revisit the measure barely six weeks after it took effect on Jan. 1.

Rather than retreating, Petro escalated the confrontation, calling for nationwide demonstrations on Feb. 19 to defend what he described as a historic social gain for Colombian workers.

“We’ll see each other in all public squares across Colombia,” the president wrote on social media, framing the dispute as a struggle over dignity and constitutional labour rights rather than a technical wage-setting debate.

Petro anchored his argument in Constitutional Court ruling C-815 of 1999, which he said obliges governments to consider not only inflation and productivity but — “with prevailing character” – the constitutional mandate to guarantee a minimum, vital and mobile wage.

Even higher wage not ruled out

In a move that further unsettled markets and business groups, the government signalled that the revised decree could maintain – or even exceed – the original 23.7% increase.

Labour Minister Antonio Sanguino said on Monday that “nothing is ruled out” as the government reconvenes the Permanent Commission on Wage and Labour Policy, bringing unions and employers back to the negotiating table.

The president himself suggested that a true “vital wage” should be closer to 2.15 million pesos, well above the current level.

Sanguino said the commission would review updated economic indicators from the national statistics agency DANE and the finance ministry, including inflation data for early 2026 and labour market trends from 2025.

Inflation and employment debate intensifies

Petro dismissed warnings that the wage hike could fuel inflation or unemployment, arguing that recent data contradict those claims. In a post on “X”, he said that even with Central Bank’s inflation forecasts near 6.4%, wage growth would remain strong and support domestic production and productivity. “It would be a national stupidity to lower the vital wage,”added  Petro, affirming also that the country’s first leftist administration would still listen to business leaders.

Economists and employers, however, remain sceptical. Financial analysts claim the suspension highlights institutional concerns over policy predictability, and fear the standoff could undermine investor confidence at a time when Colombia is grappling with deep fiscal debt and high labour informality.

The wage dispute has sharpened tensions between Colombia’s Executive, judiciary and private sector, just three months before first-round presidential elections in May 31.

The outcome of the Council of State’s final ruling – and whether the Executive succeeds in forging a late compromise with employers — will shape not only labour costs in 2026 but also a broader debate over economic governance and the autonomy of the Banco de la República.

For now, the minimum wage remains in legal limbo — enforced by decree, contested in court, and to be defended by his political base this week on the street.

Bogotá, Colombia — In the past week, Colombians have taken to the streets on two occasions to defend the government’s minimum wage increase as it faces legal attacks by business sectors. 

On January 28 and February 3, Colombians marched in major cities in support of the landmark 23% wage increase established at the end of last year.

But the future of Decree 1469, which established what the government has called a “living wage”, remains uncertain.

“This is a major step forward by the government of Gustavo Petro. It is not just an increase; it is the dignification of workers’ wages in Colombia. That is why, as union members and as teachers, we support this mission, which directly impacts people’s everyday lives,” Oscar Patiño, an attendee of the January 28 march, told The Bogotá Post. 

For Patiño, a teacher and union leader, the protest represented a demand that the Council of State act as a guarantor of workers’ rights through its role in defining public policy.

He was part of a wave of sit-in protests in cities across the country called by labor unions, with the backing of the government, to defend the minimum wage hike. The 23% raise brings the monthly base salary to COP$1,750,905 (USD$477) and the transportation allowance to COP $249,095 (USD$68). 

In Bogotá, the demonstration was joined by Labor Minister Antonio Sanguino and lawmakers from the pro-government bloc, including Senator Wilson Arias.

“This increase no longer leaves workers’ wages below key economic indicators. It is for the improvement of their quality of life,” said another attendee, who did not want to be named.

As well as raising the base salary, December’s decree incorporated the concept of a “living wage” as an additional criterion for setting the increase. This concept is not new: it is enshrined in Article 53 of Colombia’s Political Constitution and in International Labour Organization (ILO) Convention No. 131 of 1970.

“In that ruling, the Constitutional Court reminds the government that when setting wages, remuneration must be minimum, I quote, ‘living, and adjustable,’” said Mery Laura Perdomo, a lawyer specializing in labor, social security, and constitutional law. 

The “living wage” responds to the real cost of living, unlike the minimum wage, which barely covers basic needs. “This helps generate conditions for a dignified life in a Social State governed by the rule of law … The major shift is from a minimum wage to a living wage,” said Labor Minister Antonio Sanguino.

The government passed the decree raising wages unilaterally after failing to reach consensus with government representatives, business associations and labor unions. It determined the base salary raise based on economic criteria such as inflation (CPI), GDP, the contribution of wages to national income, inflation targets, and productivity.

But the decree generated dissatisfaction among business associations and parts of the public, prompting them to pursue legal action. 

Perdomo notes that there are two types of challenges to the wage increase: tutela actions—arguing violations of fundamental rights, specifically due process or harm to certain companies—and a lawsuit seeking the annulment of the decree.

“I believe there are no sufficient legal grounds for a potential declaration of unconstitutionality,” Perdomo said, noting that the decree grounds its constitutionality in ILO conventions, the constitution, and technical and economic studies and criteria. “There are constitutional, legal, jurisprudential, and technical-economic grounds to say that this minimum wage decree could not be declared unconstitutional.”

So far, tutela actions have not succeeded, according to Perdomo. As for the annulment lawsuit—filed by the National Federation of Merchants (Fenalco)—it is currently under review and awaiting evaluation by the assigned judge, according to the Colombian economic magazine Portafolio. The claim argues that constitutional and legal criteria were disregarded.

Portafolio also reports that the risks of the legal debate lie in the possibility that, while a final decision is pending, the Council of State could not only annul the decree but also order a provisional suspension of the wage increase.

But Perdomo warned this would be an unpopular move ahead of next month’s legislative elections: “Politically, this is risky in an electoral context, since a large portion of the population—especially low-income earners—is satisfied with the minimum wage increase. Overturning it could sour the political climate on the eve of elections and have a real impact on voting intentions.”

Meanwhile, Petro’s ruling Pacto Historico coalition, which has formed into a party ahead of the elections, has made a point of championing the minimum wage increase. 

On Tuesday, it called for rallies across the country to support the living wage, justice, and labor dignity. 

“The living wage is not a favor; it is a right. A dignified life begins with fair work, and this mobilization reminds us that labor dignity is the foundation of social justice,” declared Health Minister Guillermo Alfonso Jaramillo from Bogotá’s Plaza de Bolívar.

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