Latin America’s Workweek Shrinks: What Businesses Face as Labor Laws Tighten

From July 2025, the maximum legal workweek in Colombia drops from 46 to 44 hours. By July 2026, it will reach 42 hours. Lawmakers designed the shift to happen gradually, reducing hours each year since 2023.

The law applies to private sector workers but excludes most public employees and those under special contracts. Employers cannot lower wages or cut benefits to offset the shorter week.

Lawmakers in Colombia and other countries hope that more free time will boost productivity and worker well-being. However, the data shows a more complex picture.

Colombia, Mexico, and Chile have some of the longest working weeks globally, but they lag behind in productivity.

The OECD reports that longer hours do not guarantee higher output. In fact, high informality and rigid labor regulations often limit efficiency.

Chile is following a similar path. Its new law will lower the workweek from 45 to 40 hours by 2028, with the first cuts already in place.

Mexico’s Congress is debating a reduction from 48 to 40 hours, but no law has passed yet. Peru has proposals under discussion, but the 48-hour week remains.

Latin America’s Workweek Shrinks: What Businesses Face as Labor Laws Tighten

For business owners, these changes mean higher labor costs. Companies must pay the same wages for fewer hours worked.

Overtime, night, and holiday pay rates also rise as the standard week shrinks. Small and medium-sized businesses, which employ most workers in the region, feel the impact most.

They must update payroll, shift schedules, and timekeeping systems to comply. Many will need to automate tasks or hire more staff to cover the same workload.

Latin America’s labor markets already face high informality. About half of all jobs remain off the books, driven by strict regulations and high minimum wages.

When labor costs rise, some firms may move more jobs into the informal sector or reduce hiring. This trend could undermine the intended benefits of shorter workweeks.

Dominican Republic Tests Shorter Workweek Without Pay Cuts

Despite these risks, some studies suggest that reducing work hours can improve employee morale and retention.

Businesses that adapt early may see gains in worker satisfaction and efficiency. However, these benefits depend on how well companies manage the transition and whether they can keep up with rising costs.

The real story is that Latin America’s push to shorten the workweek reflects a global trend, but the region’s unique challenges-high informality, low productivity, and rigid regulation-make the transition complex.

Businesses must plan carefully, invest in compliance, and find ways to stay competitive as labor laws evolve.

The success of these reforms will depend on how well companies and workers adjust to the new reality.