Colombia’s government has announced a 22.7% increase in the national minimum wage, raising it to 1.75 million pesos per month (about $470 USD) starting in 2026. The measure, unveiled by President Gustavo Petro, will impact an estimated 2.5 million workers across the country and represents the final minimum wage hike of his administration before national elections scheduled for May 2026.

In a public address, Petro said the increase is aimed at reducing inequality and improving quality of life for working Colombians, framing the move as part of a broader effort to “democratize wealth.” The new wage more than doubles the 9.54% raise approved for 2025, which lifted monthly pay to 1.42 million pesos. It also exceeds inflation forecasts for 2026, which economists at Colombia’s central bank estimate at 3.6%, down from 5.1% projected for this year. Petro acknowledged the decision could place additional pressure on inflation.

The announcement has sparked debate among economists and business leaders. Banco de Occidente chief economist David Cubides criticized the increase as “absolutely unsustainable,” warning it could drive up government payroll costs, pensions, and expand the informal labor market. He also suggested inflation forecasts may need revision and that interest rates could rise in the medium term.

The wage hike was enacted by decree after negotiations between business groups and labor unions failed to reach an agreement. Alongside the increase, Petro also introduced a transport subsidy for workers earning up to two minimum wages. Combined with wages, the subsidy will raise total minimum monthly compensation to 2 million pesos, further boosting take-home pay for lower-income workers.

The move underscores the sharp economic and political contrasts shaping Colombia as it heads toward a pivotal election year.