Executive summary
The COVID-19 pandemic has hit Colombia hard and exacerbated many long-standing social challenges, pushing up already high rates of income inequality and informality. A significant policy response has cushioned many of the economic effects of the pandemic, but ambitious policy reforms are needed to heal the scars of the pandemic.
Over the past two years, the government has undertaken a wide range of measures to encourage and facilitate the formalisation of workers. In particular, two digital platforms have been launched to simplify the registration of companies and the affiliation of workers to social security. The government also introduced a “Social Protection Floor” to offer (minimal) social protection to workers earning less than the minimum wage and established a National Network for Labour Formalisation to promote the advantages of formalisation in rural areas. Finally, the government introduced financial incentives to stimulate job creation and implemented a strategy to train young people to join tertiary education, find a job or become entrepreneurs.
While these measures are all welcome and innovative, they have not yet had an impact on informality. The informality rate, measured as the share of workers who are not affiliated to social security, hovered around 60.6-60.8% between 2016 and 2019. Similar to several other Latin American countries, the informality rate in Colombia initially declined during the pandemic as a result of a larger outflow of informal workers than formal workers, but rose again afterwards, to 61.6% in 2021. To reduce informality and improve social protection in a sustainable way, major labour market and social policy reforms are needed, as discussed in detail in OECD Reviews of Labour Market and Social Policies: Colombia 2016 and OECD Economic Surveys: Colombia 2022. Reducing the cost of formal employment, while ensuring basic social protection for all is particularly important.
It is noticeable, however, that the number of associated work co-operatives has been brought down successfully through an improved legal framework and clear guidelines for labour inspectors. At the same time, the persistent misuse of other types of civil law contracts remains problematic in Colombia. For instance, union service contracts are frequently used in the health sector, instead of regular labour contracts, to formalise a working relationship between a worker and a trade union/company. The pandemic caused a surge in the number of such contracts for the hiring of administrative and medical staff, whose labour and trade union rights cannot be guaranteed through this type of contract. A similar problem exists in the public sector, where service contracts are used for regular labour relations. Despite repeated commitments to reduce administrative law contracts in collective bargaining agreements, the number of workers contracted in the public sector through such contracts doubled between 2014 and 2021, reaching nearly a third of the total public sector workforce.
As pointed out in previous OECD reports on this matter, the Colombian Government should improve its efforts to protect the labour rights of subcontracted workers and prohibit union service contracts and other forms of abusive (sub)contracting through a stronger legal framework. In the interim, monitoring and assessing the use of such contracts remains crucial to ensure that they do not undermine the labour and trade union rights of the involved workers.
Over the past few years, the Colombian Government has taken major steps to improve the labour inspection system, including a three-fold increase in the labour inspectorate’s budget in 2018; the opening of civil service positions for labour inspectors (instead of provisional appointments); a commitment to considerably increasing the total number of labour inspectors in the coming years; improved training programmes for inspectors; an innovative software for effective case tracking in labour inspections; and a mobile labour inspection to help promote labour law compliance in rural areas.
Nevertheless, several challenges continue to affect the effectiveness of the labour inspection system. In particular, the budget remains volatile and dependant on broader government decisions. Inspection efforts have largely shifted towards preventive inspections, whereas reactive visits following a complaint or indication of abuse have become rare. As a result, the number of sanctioning procedures and imposed sanctions decreased considerably. Finally, the times needed to conduct investigations continue to exceed the legally mandated duration, and 30-40% of fines remain uncollected each year.
To ensure the enforcement of labour regulations and workers’ rights, it is crucial to continue reinforcing the labour inspectorate’s functioning. The transfer of fines collection from the National Training Service to the Ministry of Labour and the increase in the total number of labour inspectors are both highly welcome, but continued efforts are needed to improve inspections, sanctioning procedures and collection of fines. A more balanced use of reactive versus preventive inspections would improve the deterrence effect of labour inspections more broadly and encourage employers to comply with the labour regulations voluntarily.
While a major new collective agreement has been signed in the public sector in 2021, the modest improvements that had been made in the private sector up to the end of the 2010s have been reversed by the pandemic, with the total number of collective agreements in the private sector dropping to the lowest number in a decade. More worryingly, there have not been any regulatory reforms to improve the collective bargaining framework, and there are no reforms foreseen. As discussed in previous OECD reports, significant obstacles to constructive social dialogue and collective bargaining persist in Colombia. In particular, collective agreements are not automatically extended within firms; collective pacts continue to undermine the power of trade unions; trade union fragmentation complicates the bargaining process; there is currently no framework to allow for sectoral bargaining; and conditions on the right to strike are sometimes overly strict. On a positive note, an electronic trade union registration system has been set up to register statutes, pacts, agreements, contracts and other actions of the trade union organisations and will provide reports and statistics on the subject, to monitor their developments.
Significant efforts are required to build a constructive framework for social dialogue in Colombia, including: (1) the promotion of a two-tier system of sectoral and firm-level bargaining, by elaborating the regulations on sectoral bargaining in the Labour Code; (2) the elimination of the option to negotiate collective pacts; (3) the automatic extension of collective agreements to all employees of a company, and not only to the members of the signatory trade unions (the erga omnes principle); (4) the requirement for multiple trade unions in the same company to form a bargaining team to ensure a single collective agreement; and (5) the right to strike to higher-level trade union organisations. With better social dialogue and reinforced collective bargaining, Colombia could consider a gradual adjustment of the very high minimum wage to bring it back to its original role of wage floor instead of wage norm.
Despite efforts to eliminate violence against members of trade unions, Colombia continues to be the deadliest country for trade unionists in the world (ITUC, 2021[3]), with a rather stable number of homicides of trade unionists per year, around 19 between 2017 and 2021. While the collective protection mechanism for groups and communities is now in place and requests are being evaluated, both the number of trade unionists receiving protection and the budget of the National Protection Unit has decreased over the past five years. Part of the decrease reflects the drop in the number of requests for protection, but delays and ineffectiveness in evaluating the requests and implementing the protection measures may also play a role. The normative measures that have been implemented to improve the response time in the evaluation procedure could, in practice, undermine the protection of trade unionists.
The Colombian national authorities reported tangible progress in the prosecution of crimes against trade unionists based on strategies that were particularly designed to investigate such crimes. At 43.2%, the rate of advance in the investigations of homicides against trade unionists between 2017 and 2021 is higher than for other cases of intentional homicide (29.7% for 2020). Nevertheless, only 13 of the 98 cases with trade unionists that occurred between 2017 and 2021 had a sentence at the time of writing, and the intellectual authors responsible for these crimes are rarely identified.
With respect to investigations of violations of rights of assembly and association under Article 200 of the Criminal Code, only a low number of cases are brought to trial. Most cases are archived or withdrawn by the complainant, and not one case has resulted in a conviction so far. Conciliation is also a common way to close the investigations under Article 200. Yet, there is no follow-up mechanism under the Criminal Code to ensure compliance with the conciliation agreement. The only option for employees is to present a new lawsuit before a Civil Court to force the execution of the conciliation agreement, thus potentially making the legal procedure even more difficult.