Colombia has made major advances over the past decade in lowering labour informality and improving social security coverage among workers through improved education, a reduction in non-wage labour costs, and a series of measures to facilitate the formalisation of workers and companies. When measured as the share of workers who are not contributing to the pension system, informality decreased from about 70% at the beginning of the 2010s to 57.8% in the last quarter of 2023. Even so, Colombia’s informality rate remains higher than in many other large countries in the region, where on average 49.4% of workers are not contributing to the pension system. Significant additional efforts are thus needed to reduce labour informality in the country. As discussed in detail in the 2022 OECD Economic Survey of Colombia (OECD, 2022[1]), a major reform of Colombia’s social security system is required to further reduce non-wage labour costs and improve social protection for all.

Since the beginning of its presidential term in August 2022, the current Government of Colombia has presented three major social reforms to Congress, on healthcare, pensions, and labour. The labour market reform, which aims to foster decent work and strengthen guarantees of job stability and formal employment with social justice, was submitted to Congress in August 2023 and is currently under discussion in the Seventh Commission of the Chamber of Representatives (which is responsible for labour issues). If the reform is approved by the Commission before the end of June 2024, three more debates are required to finalise the discussion in Congress. The most contentious issues in the debates appear to be around social dialogue and collective bargaining, such as modifications to the right to strike and the introduction of a framework for sectoral bargaining. If the reform is rejected in any of the four discussions, other means would have to be sought to introduce (some of) the reforms.

The potential impact of the reform on informality is key element in the debate. Some stakeholders argue that informality will increase due to higher labour costs, while others suggest that there might be room for employers to absorb an increase in costs. In the second version of the reform proposal, several provisions were therefore added to facilitate the formalisation of small businesses and certain occupations. In line with Colombia’s commitments to the OECD, the government also included a ban on new union service contracts (which undermine labour rights and access to social security of the workers involved) in the proposal and continues to strengthen the one‑stop shops that facilitate the registration of companies and workers. Generous hiring subsidies that were introduced during the pandemic to promote the creation of formal jobs were also extended. Nevertheless, careful attention should be paid to potential deadweight losses (which arise when subsidies support the hiring of workers that would have been hired even without the subsidy) and a more targeted use of subsidies for vulnerable groups should be considered. Finally, and as highlighted during the accession process, further efforts are required to address the persistent misuse of administrative law contracts for regular labour relations, in particular in the public sector.

To strengthen labour law enforcement and in line with OECD recommendations, Colombia made major improvements over the past years in the budget and staff allocated to labour inspection. The ministry also continued training labour inspectors and improving mobile labour inspection in rural areas. However, turnover among labour inspectors remains a significant problem, leading to a continuous loss of knowledge and complicating the functioning of labour inspection. The improvements in staff and budget did not translate in additional investigations or sanctions, on the contrary. The number of investigations and sanctioning procedures plummeted over the past seven years, and nearly half of all investigations last longer than the legally mandated timeframe. As both the number and value of imposed fines dropped, so did the amount of collected fines in the years thereafter. To ensure the enforcement of labour regulations and workers’ rights, it is crucial to reduce turnover among labour inspectors, ensure investigations are concluded within the legally mandated duration, and continue training inspectors.

Colombia has ratified all fundamental ILO conventions and recognises freedom of association in the Constitution and Labour Code. However, as pointed out in previous OECD reports on this matter, significant obstacles to constructive social dialogue and collective bargaining persist in Colombia. The labour reform proposal that is currently under discussion in Colombia’s Congress incorporates several provisions in line with Colombia’s commitments to the OECD, in particular the establishment of a framework for sectoral bargaining, the removal of prohibitions on the right to strike, the promotion of single collective agreements to counteract the adverse effects of trade union fragmentation, and the prohibition of collective pacts. Colombia is encouraged to advance in the approval of the reform and explore ways to address other recommendations made during its OECD accession process. In particular, Colombia is invited to automatically extend collective agreements within companies, eliminate multi‑affiliation, and reassess the role of the minimum wage. Furthermore, additional mechanisms for mediating industrial disputes are needed to effectively address collective conflicts.

As discussed in the last chapter of this report, there has been a decline in the number of reported homicides and other forms of violence towards trade unionists in recent years. Even so, trade union leaders and members in Colombia continue to be victims of violence. Depending on the source and the classification of trade unionists as social leaders, 8 to 16 homicides cases of trade unionists have been reported for 2023. The discrepancy between reported cases from different sources underscores the complexity of accurately capturing the extent and reasons of violence against trade unionists versus social leaders more generally.

Some efforts have been made to address the persisting use of violence against trade unionists in public demonstrations, offer them protection, and prosecute crimes against trade unionists. However, the low rate of convictions for crimes against trade unionists remains a concern, indicating the need for continued efforts to combat impunity. Recent strategies implemented by the Prosecutor General’s Office demonstrate a commitment to improving investigations and addressing violations of rights of assembly and association. Nevertheless, there is no follow-up mechanism to ensure the compliance of conciliation agreements, which is the most common way to close investigations of violations of rights of assembly and association.