Thursday, July 7

Boric promulgates the largest increase in the minimum wage in 29 years in Chile: “Let no one be left behind”

The president of Chile, Gabriel Boric, has enacted this Monday the law that promotes the largest increase in the minimum wage in 29 years. In his statement, he pointed out that his government is “deeply committed to promoting decent work” and has emphasized the need for “no one to be left behind.”

“It is always said that we can disagree in some ways and have complex debates, but when we agree we get the best out of ourselves,” Boric pointed out, pointing to the unanimity with which the initiative was approved in the Chamber of Deputies and Deputies In the past week.

“What we are promoting is not against anyone, they are agreements that are for the benefit of all the citizens of our country (…) We are building on the basis of what those who preceded us did. We would not be able to talk about raising the minimum wage to 400,000 ($480) if it were not for the efforts that were made earlier,” he detailed. “We have a large and important social fracture in Chile, which we are going to face with more dignity for the inhabitants of our country,” she concluded.

The rise in the minimum wage in Chile was the product of a historic agreement between the Executive and the Central Unitaria de Trabajadores (CUT), the largest trade union center in the country, and puts this country at the forefront of Latin America, although it would still be very far from the main OECD member countries in terms of minimum wage.

The initiative stipulates an increase in two tranches: up to 380,000 pesos on August 1 (about 440 dollars) and up to 400,000 pesos thereafter.

The Minister of Finance, Mario Marcel, explained after the parliamentary discussion that the project will benefit one million workers and that it also includes a subsidy for small and medium-sized enterprises (SMEs) to cover the increase in the minimum wage that is above inflation and aid to the most vulnerable to face the rise in the price of the basic food basket.

If the accumulated inflation in 12 months to December 2022 exceeds 7%, the project also determines that the minimum income will rise to 410,000 pesos per month (492 dollars) from January of next year.

After a historic rebound in GDP of 11.7% in 2021, the largest expansion in four decades, the Chilean economy is showing signs of cooling off and is registering unprecedented inflation since the 1990s. Inflation in March registered a year-on-year increase of 9 .4% in twelve months, a situation that has led the Central Bank to raise benchmark interest rates as a containment measure from 2.75% to 7% in less than half a year, something unprecedented in more than 20 years.