BTN News: In 2024, Colombia’s proposed labor reform is stirring significant debate across the country. The reform, which recently passed its first legislative hurdle in Congress, aims to overhaul labor laws to better protect workers. However, it has faced fierce criticism from the business sector. Colombian employers argue that while the reform seeks to improve conditions for formal workers, it could also stifle job creation and increase costs for businesses, especially small and medium-sized enterprises (SMEs). As the reform moves toward a second debate in the House of Representatives, key concerns about employment contracts, dismissal indemnities, and increased labor costs have emerged.
Employers Push Back Against Colombian Labor Reform
The National Business Council, representing 32 of Colombia’s largest business associations, has voiced strong opposition to the current version of the labor reform. In a recent statement to Congress, they called for substantial revisions, arguing that the proposed changes would negatively impact both job creation and efforts to reduce the country’s 56% labor informality rate.
The council insists that any reform should focus on stimulating employment growth while addressing informality, which they describe as a “persistent scourge” affecting the Colombian job market.
Higher Costs and Strained Finances: Why Employers Are Concerned
A major sticking point for employers is the shift towards making indefinite-term contracts the standard for employment. Under the new rules, fixed-term contracts would be limited to a maximum of four years. Beyond this, contracts would automatically convert to indefinite terms. Employers claim this change, along with increased costs for unjustified dismissal, will reduce financial flexibility and hurt their ability to adapt to unforeseen business changes.
“Raising dismissal indemnities by as much as 98% for some workers will place an unsustainable burden on SMEs,” the council warns. “This could compromise their very survival.”
For employers, the financial strain would be especially acute for small and medium-sized enterprises, which already face limited financial reserves. They argue that an increase in severance costs, especially for those earning under 10 minimum wages, could push the costs up to 165% for higher earners, potentially leading to reduced hiring and more layoffs.
Impact on Night and Weekend Work: A Threat to Competitiveness?
The reform also proposes moving the start of the night shift from 9 p.m. to 7 p.m., alongside raising Sunday and holiday pay premiums from 75% to 100%. Businesses fear these changes will raise operational costs significantly, potentially making Colombian firms less competitive.
These adjustments could have severe consequences for industries that rely heavily on night work, such as security services, commerce, tourism, manufacturing, and agriculture. Employers predict that higher costs will reduce nighttime hiring and could even increase the risk of workplace accidents due to overburdened workers.
Concerns Over Learning Contracts and Apprenticeships
Employers are also alarmed by changes to learning contracts, particularly the move to reclassify them as fixed-term contracts. They argue this change would double the costs associated with hiring apprentices, particularly for companies required to engage with apprentices from the national training service, SENA. The cost of maintaining three apprentices could rise by over 100%, from 2.6 million to 5.3 million pesos per month.
“This reform may dissuade businesses from hiring young, inexperienced workers,” the council argues. “Instead, it could become cheaper for businesses to pay the mandatory apprenticeship fee rather than provide training opportunities.”
New Rules for Agriculture and Platform Work
For the agricultural sector, employers highlight concerns about vague language in the proposed contract regulations, such as “agro-industrial company” or “essentially subordinate family work.” They argue that the lack of clarity could undermine legal certainty and stability in hiring practices for seasonal and temporary agricultural work.
Similarly, companies that operate through digital platforms, such as delivery apps, fear the proposed reforms could significantly increase their labor costs. This change could potentially impact the financial stability of these platforms, reduce the availability of gig work, or raise the prices charged to end users.
Extended Paternity Leave: More Burden on Employers?
Another controversial aspect of the reform is the proposal to extend paternity leave from two weeks (14 days) to six weeks (42 days). While acknowledging the social benefits, employers argue this extension would further increase costs for businesses, as they would need to cover absences or hire temporary replacements for a longer period.
Calls for Revisions: Balancing Worker Rights and Economic Realities
The National Business Council concludes by urging lawmakers to rethink several aspects of the reform. They suggest moderating the changes to indemnity calculations, reconsidering the shift to night shift hours and overtime premiums, and ensuring that labor law updates do not inadvertently harm the very sectors they aim to support.
As the debate over Colombia’s labor reform continues, the focus remains on finding a balance between enhancing worker rights and maintaining a favorable economic environment for business growth and employment creation.
Conclusion: With a second congressional debate looming, the fate of Colombia’s labor reform hangs in the balance. As it stands, the proposed changes could significantly impact businesses, workers, and the wider economy. Whether the final legislation will strike the right balance remains to be seen, but for now, employers are sounding the alarm, emphasizing the need for a more nuanced approach that protects jobs, supports growth, and fosters competitiveness in a challenging economic landscape.
