This week the increase in the minimum wage began in Chile. As of January, the monthly minimum wage increased from CLP$400,000 (equivalent to US$468) to CLP$410,000 (US$479.7) for workers over 18 years of age and up to 65 years of age.
The minimum income adjustment was due to the fact that accumulated inflation in the 12 months to December 2022 exceeded 7%. The measure was established in the readjustment law promoted by the Government, promulgated at the end of May 2022.
The salary of CLP$410,000 will be in force until April 30, since that month the Executive will have to propose a new project to Congress to readjust the minimum income with the aim of taking effect as of May 1, 2023.
NEW ADJUSTMENTS
The intention of Chilean President Gabriel Boric is for the minimum wage to reach CLP$500,000 at the end of his term, which will end in March 2026 with the investiture of his successor.
“We maintain our commitment as a government that during our term the minimum wage will reach CLP$500,000, and for that we are going to need the collaboration, as we have had in this first year, of workers and employers,” the president said in August , amid the salary increase from CLP$380,000 to CLP$400,000.
It should be noted that Boric raised, for the first time in his management, his salary from CLP$350,000 to CLP$380,000 in May. It was the largest increase in 29 years, which tried to offset the high inflation that reached its peak of 14.1% per year in August 2022 and had a negative impact on worker remuneration.
DECLINING REAL WAGES
In fact, in November, the real Nominal Remuneration Index (IR) —which measures the evolution of remunerations adjusted for the monthly variation of the CPI— registered 14 months of falls. Today the National Institute of Statistics announced that the IR registered a rise of 10.7% in twelve months, while the Real Index fell 2.3% year-on-year, accumulating a variation of -2.8% in the eleventh month of 2022.
“The average remuneration per ordinary hour was CLP$6,070, registering a year-on-year increase of 10.2%. This value was located at CLP$5,751 for women, which meant an annual variation of 10.3%, while for men it stood at CLP$6,346, registering an increase of 10.1% in the same period”, said the INE in a statement.
Meanwhile, the average cost of labor per total hour was CLP$6,964, recording a 10% increase in twelve months. “This value was located at CLP$6,591 for women, which implied an interannual increase of 10.2%, and CLP$7,288 for men, registering a rise of 9.9% in the same period,” added the institute.
With information from Bloomberg