Colombia’s new labor law, signed into effect by Colombian President Gustavo Petro on June 26, is intended to support workers’ rights by delivering job stability, increased benefits and ensured protections. While the law is popular among trade unions, it stalled in Colombia’s congress as the opposition claimed it would detriment employment and businesses. New benefits for workers are expected to increase costs for business owners, but providing workers with more power within their industries can reduce poverty.

Aims of Colombia’s New Labor Law

• Workday and overtime reforms. The law redefines the standard workday as eight hours and caps overtime at two hours per day or 12 hours per week, ensuring that workers cannot be exploited with extended hours. Salaried workers’ overtime, Sunday and holiday pay will rise, with Sunday and holiday rates set to progressively increase from 75% to 100% over three years. In addition, employers will have to provide higher compensation for overnight work, which has been redefined as 7 p.m. to 6. a.m. For workers, these reforms will likely result in higher earnings for those in service sectors, retail, hospitality and logistics. At the same time, employers may see increased labor costs, especially for businesses relying heavily on late or weekend shifts.
• Mandatory contracts. Colombia’s new labor law limits the use of short-term and fixed-term contract workers to encourage stable job growth and retention. Indefinite-term contracts will now be the standard, allowing workers to agree to a job for an undefined period. Fixed-term contracts will convert to an indefinite agreement if they extend more than four times or exceed a timespan of five years. This change will give employees more job stability and predictability, less flexibility for seasonal hiring and more long-term obligations for employers.
• More benefits for gig workers. Employers will be required to provide gig-economy workers, like food delivery drivers, with medical coverage and social security benefits, in addition to formally classifying these workers as freelancers. Employers will be subject to higher compliance costs and restructuring of their business models. However, workers will be granted better access to health care, job protections and fairer treatment.
• Supporting remote work. Provisions regarding telework in Colombia’s new labor law provide a connectivity allowance for remote workers who earn up to twice the minimum wage. Also, it requires companies, depending on their size, to offer remote work to their employees.
• Emphasizing worker protections. Anti-discrimination laws were expanded with this bill and included pregnant women, disabled workers and employees nearing retirement. This enactment will help enhance diversity and equity in the workplace.
• Uplifting community members and child care. Around 69,000 community mothers who provide care and education to children in their communities will be officially incorporated into Colombia’s Institute of Family Welfare. This state entity reaches around three million Colombians and provides support services for children and families. With this enactment, community mothers will have more state assistance and access to necessary resources. This is likely to positively impact the care they can provide the children under their supervision.&
• Protecting students. According to the bill, student interns must be provided monetary compensation and benefits such as vacation time and severance pay. Around 400,000 students who participate in internships will gain complete labor rights and full pay.

How It Can Help Reduce Poverty

With increased access to reliable contracts and government support, workers in Colombia can more effectively sustain jobs to support their families. In addition, poverty can be ameliorated by providing workers with easier access to welfare benefits and higher minimum wages. For workers in Colombia, these reforms subsidize the amount of income they are spending on necessary services, leaving room for emergencies and adequate nutrition.

Formalizing the gig economy, paying workers more and limiting atypical contracts are expected to increase labor costs. However, these reforms have the promising potential to underpin the workforce, provide fair compensation and benefits and help sustain poverty reduction by offering workers viable and endurable opportunities.

As employment in Colombia steadily rises, workers must be supported with effective social services and protected by enforced labor laws. Compliance from employers, government oversight and support for workers and businesses will be critical to improving conditions for Colombian workers and effectively reducing poverty throughout the country.

– Erin Hellhake

Erin is based in Old Bridge, NJ, USA and focuses on Global Health and Politics for The Borgen Project.

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