Paula Garda
OECD
Michael Koelle
OECD
OECD Economic Surveys: Colombia 2024
OECD Economic Surveys: Colombia
Abstract
Reducing inequality and poverty remains a longstanding challenge for Colombia, despite recent improvements. Disparities in access to essential public services, education, and high-quality job opportunities, hinder upward social mobility, exacerbated by regional and demographic disparities. The government's ambitious social reform agenda holds promise for enhancing equity and opportunities. Strategies aimed at reducing informality, improving access to high-quality education, and closing gender gaps in the labour market would bolster this agenda and foster stronger long-term growth and a fairer distribution of income and opportunities.
Reducing income inequality and poverty are long-standing challenges for Colombia. Despite improvements following the pandemic driven by a strong economic recovery, minimum wage increases, social transfers and better targeting, both inequality and poverty rates remain the highest in the OECD (Figure 4.1). Multidimensional poverty has consistently fallen since 2010, but still reveals large disparities among individuals in its different dimensions, including access to health care, education, infrastructure, rural land, and adequate jobs. There are also wide disparities in income and other dimensions of wellbeing across regions (Chapter 3).
Note: In Panel A, poverty is defined as the share of people living in a household with income below 50% of the median disposable household per capita income. This poverty measure is different from the national definition of poverty by DANE, which is presented in Panel C. In Panel B, the Gini index measures the extent to which the distribution of income among households within an economy deviates from a perfectly equal distribution. In Panel A and B, LAC is a simple average of ARG, BRA, CHL, CRI, MEX and PER. Panel C shows poverty rates using the national definitions based on the calculation of the basic food consumption basket. Multidimensional poverty assesses various dimensions of deprivation, such as education, health, access to decent jobs, clean water, sanitation facilities, electricity, adequate housing, and other assets to provide a comprehensive understanding of poverty beyond income-based measures.
Source: World Bank World Development Indicators; and OECD calculations based on DANE.
Poverty rates significantly differ among regions, rural and urban areas and demographic groups (Figure 4.2). Poverty and lower incomes particularly affect ethnic minorities and people displaced by Colombia's historical internal conflict, who are disproportionally concentrated in rural areas, as well as migrants, in particular from Venezuela. Women are also disproportionally affected by poverty, having lower employment levels and wages and a higher rate of informality when compared to men. The pension system, before the reform in 2024, left many old people in poverty and exacerbated inequalities due to low coverage of the non-contributory and contributory system and subsidies for high-income earners and low non-contributory benefits for low income retirees (OECD, 2022[1]; OECD, 2019[2]).
Note: Year 2019, except for the gap between the richest and poorest departments, rural and urban and women- and men-headed households (2022). Poverty rates are defined using the national definition based on the calculation of the basic food consumption basket.
Source: (World Bank, 2021[3]) and OECD calculations based on the Gran Encuesta Intregrada de Hogares (GEIH 2022).
Pension reform: The pension reform approved by Congress in June 2024 aims at expanding pension coverage and addressing competition between the two competing schemes in the contributory system. The reform will come into effect on July 1, 2025. The existing system allows members to choose between a state-run defined benefit plan, and an individual defined contributions savings account plan, managed by private pension funds (OECD, 2022[1]). The reform establishes three benefit pillars with an additional fourth voluntary pillar, as follows:
Solidarity pensions: The non-contributory pillar is strengthened, offering eligibility to poor and vulnerable individuals aged 65 (60) or older for men (women) with minimal to no accrued pension benefits. They will receive a monthly benefit of the “extreme poverty line”, currently estimated at COP 223 000 per month (EUR 53) nearly three times higher than the existing benefit level.
Semi-contributory pensions: Individuals with 300 to 1 000 weeks of contributions but lacking the requisite of 1 300 weeks at age 65 for men or 1 000 weeks and 60 for women will receive a life annuity based on individual contributions and a state subsidy equivalent to 30% of savings for women and 20% for men. This pillar includes workers earning below one minimum monthly wage and those who contribute to the scheme BEPS who may now include these contributions in the calculation of their life annuity.
Contributory pensions: Employees would contribute to the public pay-as-you-go scheme on earnings up to 2.3 times the monthly minimum wage and on earnings above this threshold to individual defined contribution accounts managed by private pension funds. Upon retirement, benefits from both sources would be combined into a single pension. A new public savings fund will accumulate the capital redirected from private funds and contributions to the public scheme. The normal retirement age (62 for men/57 for women) and most existing eligibility requirements remain unchanged, such as the required 1 300 weeks of contributions for men and 1000 for women. However, women with children will have shorter contribution periods, with required weeks reduced by 50 per child. Indigenous peoples, Afro-descendants, Palenqueras, and peasants have also lower required contributory weeks. Employer and employee contribution rates on earnings up to four times the monthly minimum wage will remain at 12% for employers and 4% for employees, but for earnings above this threshold, the employee contribution will increase to 6% on pay up to 25 times the minimum wage (the current earnings ceiling) to fund the solidarity pension. At retirement age, individuals with more than 1 000 weeks of contributions but less than the 1 300 weeks required for a contributory pension will qualify for an early old-age benefit equivalent to one minimum monthly wage, and the value equivalent to the missing contributions shall be deducted from their monthly allowance, until they attain 1 300 weeks. The reform introduces weekly pension contributions for self-employed and part-time workers. The transition system was set up with a requirement of less than 750 weeks for women and 900 for men.
Health: The proposed bill was shelved by Congress in early April. It aimed to improve healthcare access in rural and remote areas by reorganising the system around public primary care centres, expanding general practice clinics and bolstering diagnostic capabilities. The proposal sought to eliminate the role of Health Promoting Entities (Entidades Promotoras de Salud, EPS) as intermediaries, which currently collect mandatory monthly payments from employees and the government and use this funding to contract health providers to care for beneficiaries. The bill intended to consolidate all funds under a unified public entity responsible for direct payment to healthcare providers according to values set by the Ministry of Health. EPSs would transition to a new role, offering auditing, billing services, specialised technology, and advising public authorities. The government announced a new health reform with the same core elements will be presented to Congress.
Labour: The bill, in congress, aims to strengthen collective bargaining, improve overtime and severance pay, reduce working hours, and incrementally increase paternity leave. It also prohibits union service contracts and introduces part-time (weekly based) social security contributions for self-employed individuals, multi-job holders, workers in agriculture and platforms and other specific activities.
Education: The proposed bill which was shelved by Congress in June aimed to lower the mandatory education age to 3 and extend mandatory education to cover secondary education, ending at age 17. At the end of 2023, a presidential decree was enacted to extend free access to higher education in public institutions, starting from the first semester of the 2024 academic year. The legislation relaxes eligibility criteria, encompassing socioeconomic status, age, nationality, and prioritizing marginalized groups, victims of internal armed conflict, persons with disabilities, and single mothers. Notably, eligibility now includes those within the first three economic strata, representing 95% of Colombian households.
Citizen Income Programme (Renta Ciudadana): A new comprehensive conditional cash transfer programme that aims to consolidate all existing programmes (Familias en Acción, Jovenes en Acción, Ingreso Solidario) while enhancing coverage and benefits with the goal of progressively reaching all households in poverty or vulnerability is being implemented. The programme maintains conditionalities of cash transfers to achieve desired outcomes in education and health. By 2024, it is set to include all those facing extreme poverty.
Widespread labour informality contributes to exacerbating inequality and perpetuating poverty. Informal workers, often characterised by lower and unstable incomes, face significant challenges due to the absence of social contributory benefits and employment protections, such as access to pension plans, unemployment insurance, paid maternity leave or holidays. Rural, migrant, young, indigenous, and part-time workers as well as women and the self-employed tend to hold more frequently informal jobs (OECD, 2022[1]). Approximately 50% of the population resides in households where all working members are informal, especially affecting lower-income households (OECD et al., 2023[4]), rendering them highly vulnerable to shocks and leading to higher poverty rates among informal workers.
Labour informality has decreased considerably over the past decade in Colombia but remains higher than in many other large countries in the region (Figure 4.3). Informality declined from about 70% at the beginning of the 2010s to 56% in the first quarter of 2024, as a result of improved education, reduction in non-wage labour costs, and a series of measures to facilitate the formalisation of workers and companies (OECD, 2019[2]; OECD, 2022[1]). Notably, the 2012 tax reform, entailing a reduction in payroll taxes and employer's health contributions, resulted in an estimated 2 to 4 percentage-point decrease in the informality rate (Kugler et al., 2017[5]; Morales and Medina, 2017[6]; Fernández and Villar, 2017[7]; Bernal et al., 2017[8]). While informality declined in both urban and rural areas, the decline was much slower in rural areas where it remains very high, reaching 84% of rural employment at the end of 2023.
Note: In Panel A, informality is defined as the percentage of workers in employment not contributing to the pension system. Data from April to August 2020 are missing because during the pandemic some questions were not asked in household surveys. Panel B shows the ILO definition of informal employment as self-employment in informal enterprises (small, unregistered enterprises) and wage employment in unprotected jobs, meaning jobs with no social contributions, in both formal and informal enterprises. The ILO statistical definition is different from the one followed by DANE. LAC represents the simple average of ARG, BRA, CHL, CRI, MEX, PER.
Source: OECD calculations based on DANE; and ILOSTAT.
The fall in informality accelerated its pace between 2019 and 2023, falling by 4 percentage points overall and by 10 percentage points among women. This reduction was driven by the strong post-pandemic recovery and social security employment subsidies (Banrep, 2023[9]). These subsidies, introduced during the pandemic and extended until 2026 by the current government, offer subsidies of 30% of the minimum wage for youth, 20% for women, and 10% for men.
Further reducing labour informality is needed to reduce poverty and inequalities and boost productivity, as discussed in the 2022 Economic Survey (OECD, 2022[1]). The government efforts focus on supporting the grassroots (popular) economy, which encompasses a wide range of grassroots economic entities, including both individual and communal efforts, often informal and supported by familial and local networks (see Chapter 3). Measures aim to improve pathways to formalisation by enhancing the productivity of informal businesses and workers through vocational training, financial literacy, access to microcredit, and incorporating grassroot (popular) associations into public procurement. The reindustrialisation plan (see Chapter 3) also supports the grassroots economy. These efforts are welcome, but other measures will be needed.
Reducing informality requires a comprehensive strategy through better enforcement of tax and labour laws, and reduced non-wage labour costs, particularly for low-income workers (OECD, 2022[1]). The effectiveness of the current employment subsidies in Colombia in formalising workers underscores the need to reduce non-wage labour costs, particularly for vulnerable and low-income workers. Evidence from other countries, such as Chile and Türkiye, shows that targeted employment subsidies, which cover social security contributions for specific groups like women, youth, or small companies reduce informality (Aşık et al., 2022[10]; SENCE, 2022[11]; SENCE, 2022[12]). Other measures to reduce business informality should include lowering the tax burden, regulatory costs and the burden of setting up and growing firms, as discussed in Chapters 1 and 3. Enhancing access to education, as addressed later in this Chapter, should also be integrated into the overall strategy. As noted in the 2022 Colombia Economic Survey, ensuring minimum income protection for displaced workers would further enhance formalisation incentives.
A factor fostering informality is the relatively high minimum wage in Colombia. The minimum wage – at 90% of the median wage of full-time formal employees – is high in comparison with the OECD average of 55% in 2022. Only half of Colombian workers, and less than one in four in the poorest regions, earn at least the minimum wage (OECD, 2022[1]). Over time, the value of the minimum wage has increased faster than consumer prices and labour productivity. At its current high level, marginal increases in the real minimum wage are likely to reduce formal employment prospects for low-skilled workers, youth and people located in rural and less developed regions (OECD, 2015[13]). Aiming for adjustments in the minimum wage that take into consideration the impact on employment and informality would be a reasonable approach until it reaches a level that is friendlier to formal job creation, as recommended in the past Economic Survey of Colombia (OECD, 2022[1]). Past Colombia Economic Surveys have also recommended considering regional minimum wages.
The pension reform is a welcome step forward, offering improvements over the status quo (Box 4.2), aligning with past OECD recommendations (OECD, 2022[1]) as reflected in Table 4.1, and will help reduce inequities and poverty. The reform addresses two primary issues within the current pension system: low coverage and significant inequality, particularly evident in regressive pension subsidies and the existence of two competing systems providing different pension benefits for workers with the same career history. However, certain aspects will need improvement in the medium term.
Firstly, the pension reform increases benefits and coverage for all citizens by guaranteeing a pension to those unable to attain a contributory one, ensuring no elderly falls in extreme poverty. The reform also provides pension benefits for those workers that contributed but did not achieve the required minimum 1 300 weeks of contributions for men and 1 000 weeks for women though a new semi-contributory pillar (Box 4.1). Currently, these individuals are only entitled to the return of their contributions without any interest accrual. This is largely welcome as the current pension system exacerbates inequities leaving many elderly people in poverty given the low coverage among the most vulnerable. While this is an improvement from the previous scheme, in the medium term it would be advisable to enhance benefits within the non-contributory pillar to prevent anyone from falling into poverty, while ensuring fiscal responsibility in the process.
Until the reform, the Colombia's pension system consisted of three main pillars: First, a non-contributory pillar, Colombia Mayor, funded by general taxes and targeted at the poorest. Coverage stands at a mere 29% among the population aged 65 and above, while benefits hover around 60% of the extreme poverty line. Second, a contributory pillar featuring both a pay-as-you-go system and an individually funded system, offering varying benefits for workers with similar careers; and a third voluntary savings pillar with tax incentives. Notably, the Constitution mandates that pension amounts cannot fall below the minimum wage, ensuring only those who meet contribution term conditions (25 years in public scheme; 22 in the private pension funds) receive a contributory pension. An alternative contribution pillar is provided by the BEPs (Beneficios Económicos Periódicos- a semi-contributory system) for informal workers or those earning less than a monthly minimum wage. Pensioners can convert savings and a state subsidy intro a periodic benefit. However, up-take has remained low, with the number of people who save (around 1.6% of the old aged in 2020) and the amounts saved low (at around 16% of extreme poverty line) (OECD, 2022[1]).
Secondly, the reform unifies the two current competing contributory schemes. The contributory system allowed members to choose between a state-run defined benefit plan and an individual defined contribution savings account plan managed by private pension fund administrators. The reform enlarges the public pay-as-you-go system by redirecting contributions from the private funds towards the public system. Only workers earning more than 2.3 times the minimum wage will contribute to the private pension funds for earnings above this threshold. Around 75% of all contributions to the contributory pillar will go to the public defined-benefit component. A new public savings fund, accumulating capital redirected from private funds and contributions to the public scheme after the reform, will be managed by the Banco de la República, whose independence ensures credibility in resource management. Thirdly, the reform improves targeting by increasing subsidies to low-income workers through the solidary and semi-contributory pillars and reducing them for high-income workers in the contributory pillar when contributions fall short of outlays.
In the medium to long term, given the current aging process and to ensure fiscal sustainability of the reform (see Chapter 2) the government will need to consider parametric reforms. There are two alternatives. First, lowering the threshold from which workers need to contribute to the private pension funds, as now it is relatively high with less than 15% of all workers earning above the 2.3-monthly minimum wages. This would have the advantage of encouraging national savings and capital market depth. Second, changing the calculation of pension replacement rates. Replacement rates are generous by international standards in the public scheme, at 72% of pre-retirement earnings in 2022, compared to an OECD average of 62% (OECD, 2022[1]). The average wage over lifetime could be used to calculate the pay base, instead of the last ten years of wages (OECD, 2019[2]). Additionally, Colombia could also consider raising the retirement age (currently 57 for women and 62 for men) and equalizing the retirement age for men and women (OECD, 2015[13]). Tying pension age to life expectancy would facilitate small and automatic adjustments as life expectancy increases.
Efforts to increase labour formality will be fundamental to expand the coverage of the contributory pension scheme. The low coverage of the current scheme (25% of all workers) is primarily due to high labour informality and that only workers with a full-time monthly minimum wage can contribute. The pension reform might encourage workers to contribute to the system by granting access to the semi-contributory pillar after 300 weeks of contributions. The pension reform also encourages contributions as contributions will be based on a daily minimum wage, with a minimum requirement of one week's worth of contributions, for independent and part-time workers. However, simulations indicate that by 2100 only 22% of the old-aged will belong to the contributory system (Universidad de los Andes, 2023[14]), and most workers will belong to the semi-contributory pillar. This suggests, there is a need of further measures to ensure workers have the incentives to contribute for the full earnings and working life, becoming fully formal, as discussed above.
The labour reform presented by the Government to the Congress aligns with previous OECD recommendations and Colombia’s post accession commitments to improve formal workers’ working conditions, ban union service contracts and support collective bargaining (OECD, 2016[15]; OECD, 2024[16]). In July 2024, Congress removed most articles related to union rights and strikes from the bill, posing a challenge to meeting post-accession OECD recommendations and commitments. Moreover, a careful assessment is needed as it may encourage informality and discourage formal employment by increasing non-wage labour costs. Some studies suggests that informality will increase because of the reform (Mejia, 2023[17]; Banrep, 2023[18]). On the upside, the provisions enabling social contributions for part-time work and other measures for self-employed and other vulnerable specific occupations could help them formalise. Furthermore, the Ministry of Labour is working on measures to improve labour productivity which could mitigate the impact of the increase in non-wage labour costs. A thorough analysis is required to understand how labour and pension reforms interact and impact informality. This analysis could inform and guide the development of measures to minimise any adverse effects on informality.
The Citizen Income Programme (Renta Ciudadana) aligns with past Surveys recommendations (see Box 4.1 and Table 4.1) by increasing benefits and coverage of conditional cash transfers programmes and will help reduce poverty. Moreover, efforts to improve the targeting of social policies by introducing a new social registry are welcome and should proceed, as discussed in Chapter 2. To sustain incentives for formal employment and prevent disincentivizing beneficiaries from seeking formal work due to fear of benefit loss, a tapering phase, where the reduction in transfer value is less than the additional income earned, would encourage formal work uptake. Cash transfers can also be linked to pro-formal employment behaviours such as skills training, and engagement with public employment services, facilitating poverty alleviation efforts (OECD, 2022[1]).
High-quality education is essential for fostering equal opportunities and providing individuals with the skills necessary to access formal employment opportunities. While access to education has increased over the last decade, with a 77% graduation rate from secondary education in 2019, education outcomes remain poor and are strongly influenced by socio-economic backgrounds (Figure 4.4). Significant regional disparities in enrolment and school outcomes exist, as highlighted in chapter 3. Moreover, Colombia’s education system was severely impacted by the pandemic, which caused one of the longest schools’ closures in the OECD and widened educational lags, particularly impacting students from more disadvantaged backgrounds (OECD, 2022[1]), with 2022 PISA results showing declines in mathematics, science, and reading compared to 2018 as in many other OECD countries.
Note: Deciles refer to the international deciles of socio-economic status calculated using the PISA 2022 index of economic, social, and cultural status (ESCS). LAC is a simple average of ARG, BRA, CHL, MEX, and PER.
Source: OECD (2022),” PISA results 2022”.
The government should focus on improving both the coverage and quality of education from early to secondary levels to boost student performance, narrow learning gaps, and mitigate the influence of socioeconomic status. While the recent initiative to provide free tertiary education for vulnerable students (Box 4.1) will expand access, its effectiveness depends on ensuring equitable educational opportunities from early childhood through secondary schooling. For students from disadvantaged backgrounds, challenges like inadequate preparation and limited aspirations can hinder their pursuit of higher education as much as financial barriers.
Addressing inequality in educational outcomes will require a stronger focus on disadvantaged children and schools. School dropout rates in secondary education are a concern, with only 44 out of 100 children completing high school on time, particularly among children from public schools and vulnerable households in rural areas. The education bill that plans to extend mandatory education to the age of 17 is a welcome step but more efforts are needed. Establishing a monitoring system to identify and support at-risk students early in their education is crucial but currently lacking (Fedesarrollo, 2022[19]). For example, in Finland, early intervention, additional instruction for lagging students and tailored learning helped lower grade repetition rates and dropouts (Välijärvi and Sahlberg, 2008[20]). In 2022, around 20% of enrolled children were in full-day programmes (Education Ministry, 2022[21]). Further extending elementary school schedules, can enhance education outcomes and reduce dropouts (Radinger and Boeskens, 2021[22]). Moreover, experience in other OECD countries like Chile, Switzerland, and Japan shows that full-day programmes also boost women's labour force participation. A feasible transition to additional school time requires careful planning and funding. This includes ensuring sufficient investment in school infrastructure, subsidised meals for those not able to afford them and adequate compensation for teachers.
The quality of teaching is a key ingredient for good education outcomes, particularly in disadvantaged schools and regions where high-quality educators are often lacking. To address this, increasing incentives for skilled teachers to temporarily relocate can help mitigate inequalities, as noted in the (2022[1]) Colombia Economic Survey. Current measures, such as a 15% salary bonus, have proven insufficient. Raising salary bonuses, linked to the degree of remoteness and/or linked to performance, and offer accelerated career progression, automatic grade increases or freedom to choose the school were to teach for teachers who complete at least a 3-year tenure in disadvantaged areas would help (Forero and Saavedra, 2019[23]). Additionally, facilitating professional development and training, digital tools and resources can further support teacher development (Radinger et al., 2018[24]). Providing housing support and transportation subsidies to teachers could also enhance the attractiveness of teaching in these areas. Ensuring community support and creating mentorship programmes for new teachers can further strengthen their commitment and effectiveness in disadvantaged regions (Unesco, 2019[25]).
A high-quality, affordable early childhood education and care system is crucial for enhancing children’s educational prospects and developing cognitive, social, and emotional skills for later success, especially among the most vulnerable. Additionally, it would encourage women labour force participation. Despite progress in early childhood education enrolment, Colombia remains below the OECD average (Figure 4.5, panel A). Enrolment gaps persist, even among five-year-olds for whom attendance is mandatory, varying by location and ethnicity. Public early childhood education predominantly relies on community homes (Programa Hogar Comunitario de Bienestar) managed by the Colombian Family Welfare Institute (OECD, 2016[26]), serving 25% of 0-5-year-olds. This initiative has effectively reached rural areas and supported mothers’ labour market inclusion (Attanasio and Vera-Hernandez, 2004[27]). However, coverage discrepancies across departments are substantial, with urban areas at 40% and rural areas at 20% (Figure 4.5, panel B). Families lacking access tend to be poorer, with 60% being poor or extremely poor and 30% vulnerable in 2018 (World Bank, 2021[3]).
Note: Panel A shows 2020 or the latest available year. LAC is a simple average of CHL, CRI, MEX. Panel B shows year 2022.
Source: OECD (2023), Joining Forces for Gender Equality: What is Holding us Back?; and OECD calculations based on Encuesta Nacional de Calidad de Vida 2022.
The government’s long-term goal is to make comprehensive early education and care accessible for all children and making mandatory education from the age of 3 (Box 4.1). This will require expanding community-based programmes to cover more families and areas, including those with indigenous backgrounds, and give priority to poorer ones through proper means testing. Initiatives like Medellín’s Buen Comienzo programme, operating for children up to five years old, are good example to scale-up. To enhance accessibility, it is key to reduce entry barriers, such as simplifying documentation requirements and increasing awareness of how to access these services (World Bank, 2021[3]). Estimates put the cost of universal coverage in Colombia for children aged 3-5 at 0.3% of GDP (Forero and Saavedra, 2019[23]) financed by general taxation.
Ensuring adequate number of qualified educators to meet the educational needs and standards of preschool-aged children and enhancing the quality of early childhood education services is essential for addressing educational disparities. This includes recruiting, training, and retaining teachers capable of delivering quality early childhood education. These efforts should include to maintain appropriate student-teacher ratios, which at 33 children per one teacher in Colombia is twice as high than the OECD average (Finland, 2023[28]). Implementing rigorous methods to measure service quality, beyond self-reported data, is needed. Additionally, it’s important to introduce performance incentives for childcare providers based on the quality of care they delivery. Countries like the United Kingdom, Chile, and India use specific child development monitoring indicators, such as standardized tests and age-appropriate qualitative assessments, to evaluate the quality of childcare (World Bank, 2021[3]). Offering short and regular continuous training programmes to childcare workers would improve quality, as seen in Vietnam (Neuman, Josephson and Chua, 2015[29]), particularly benefiting rural areas where well-trained workers are scarce and childcare needs are influenced by agricultural seasonality.
Female labour force participation has rebounded from the pandemic, but still lags behind other OECD countries (Figure 4.6, panel A). In 2022, the gender employment gap stood at 25 percentage points, surpassing the OECD average by 15 points (Figure 4.6, panel B). This gap is particularly pronounced among women with limited education, living in rural areas, mothers and indigenous populations. Closing gender gaps in labour force participation would give a significant boost to Colombia’s GDP per capita, raising it by an estimated half percentage point yearly by 2050 (Figure 4.7).
Disparities also persist in job quality, with women more likely to be engaged in informal employment and part-time work and earning lower wages compared to men. Multiple factors contribute to gender gaps in the labour market, including career interruptions, educational choices, occupational segregation, employer discrimination, and women’s disproportionate burden of unpaid domestic work (OECD, 2023[30]). Women in Colombia dedicate 22 more hours per week to unpaid tasks compared to men, primarily due to traditional norms and limited rural infrastructure and childcare services. This disparity significantly hampers women’s capacity to secure and sustain high-quality employment opportunities. Enhancing early childhood education and childcare access and extending school hours is key to promote female labour force participation and formal employment as discussed above. Promoting and encouraging flexible working hours, the temporary use of part-time work for family reasons and remote work can also help women and men combine family responsibilities with paid work and help to reduce gender gaps. The recent reduction of weekly working hours to 46 can support women’s labour market participation. The proposed pension reform reduces the required number of weeks for women to access pensions for each child, recognizing and rewarding caregiving periods. Extending this right to men who take time out of the workforce for caregiving would further promote equity. Addressing legal barriers to formal part-time work, such as Colombia's requirement to pay the full-time minimum wage, and adopting hourly contributions, as planned in the proposed labour market reform and done in countries like Chile, would promote labour formality and higher pension contributions.
Note: In Panel A, LAC is a simple average of ARG, BRA, CHL, CRI, MEX, and PER, and data for ARG refer to 2021. In Panel B, LAC is a simple average of ARG, BRA, CHL, CRI, and MEX, with ARG data for 2021. Education level data pertain to individuals aged 25-64 years, while race/ethnicity data for women aged 15 years and older are from 2021 or latest. For Afro-descendant women, the LAC average comprises BRA and PER, while for Indigenous and non-Indigenous or Afro-descendant women, it includes BRA, CHL, MEX, and PER.
Source: OECD Labour Force Statistics; DANE; ILOSTAT; CEPALSTAT; and OECD Education at a Glance.
Gain in GDP growth per capita from closing gender gaps on the labour market, percentage points
Note: The simulation assumes that gender gaps in labour market participation and hours worked will close by 2060. The figure reports the difference in potential per capita output growth relative to the baseline projection from the OECD Economics Department Long-Term Model; they refer to the average yearly difference in percentage points by the end of the projection period.
Source: Fluchtmann, Keese and Adema (2023) Gender equality and economic growth: Past progress and future potential.
Although parental leave is generous in Colombia, in comparison to other Latin American countries, 60% of the workforce lack maternal or parental leave rights because they are informal workers. Colombia offers 2 weeks of paternity leave and 18 weeks of paid maternity leave, 12 of which are reserved to the mother and the other 6 to be voluntary shared. The labour bill aims to increase paternity leave gradually to 12 weeks in 2026, which will likely enhance uptake and balance caregiving roles as suggested by evidence from other OECD countries (OECD, 2023[30]). However, maternity and paternity leave will only benefit high-income female workers and not most female workers, who are informal.
Care responsibilities for the elderly disproportionately burden women. Expanding quality elderly care can boost female workforce participation and help address the challenges of Colombia’s ageing population. Formal long-term care programmes and policies to address functional dependency remain scarce (OECD, 2023[30]). Only 35% of the municipalities in the country have at least one centre for the protection and care of the elderly. Colombia's introduction of the National Care System in 2023 is under development aiming to provide a new organisation of co-responsibilities for care and guaranteeing the rights of caregivers. The care system in Bogotá is part of the models under consideration for nationwide implementation (Box 4.3). It emphasizes caregiver support and training, and aids informal caregivers through accessible information channels, following successful models in advanced OECD countries like France and the Netherlands (OECD, 2023[30]). Depending on the target population and on the services to be provided, the estimated cost of a national long-term care system ranges between 0.3% and 1% of GDP for Latin American countries, but net costs could be lower as there are potential fiscal benefits from reduced healthcare costs and increased female labour force participation (Medellin, 2020[31]; Oliveira, Aranco and Stampini, 2021[32]).
Colombia has improved female political representation, with 30% of women elected to Congress in 2022, the minimum required under the quota law, a significant increase from 2018 (19.7%). Progress is notable in the executive branch and public management positions. However, gender disparities persist at the regional and local level, with only 6.3% female governors and 12% female mayors at the subnational level, where sanctions for non-compliance with the quota law do not appear to be enforced. The uneven implementation of the quota law, and the fact that sanctions are limited for non-compliance in electoral processes, can serve as a structural barrier for women’s political participation. Spain offers an interesting example of legislation to promote gender parity in political parties. Compared to Colombia, Spain mandates a higher percentage of women candidates on party lists and imposes effective sanctions for non-compliance (OECD, 2020[33]). In the private sector, female participation on company boards is 12.9%, lower than the OECD average (28%), with most women-led businesses being SMEs (78.2%) (DANE, CPEM, ONU Mujeres, 2020[34]). Requiring listed companies to report progress on reducing gender imbalances and establishing targets for women's representation in private firms has been successful in Germany, Italy and Spain (ILO, 2020[35]). Certification schemes acknowledging companies promoting gender equality can incentivise broader adoption of these initiatives (OECD, 2023[30]).
Bogotá's SIDICU (Sistema Distrital de Cuidado) seeks to mitigate the burden of both paid and unpaid caregiving duties, addressing the needs of both caregivers and care recipients. Care recipients may include children under five, people with disabilities, and the elderly. The system has two components: 1) "Manzanas de Cuidado" (Blocks of Care), an initiative that centralises key care services to help reduce the time women dedicate to unpaid jobs/tasks. Each block care offers services like laundry, childcare, elderly care, and support for people with disabilities. The block also provides offers learning services for men where they undergo through several home tasks. The first Care Block was piloted in Ciudad Bolivar and, nowadays, there are 11 of such Blocks across Bogotá. For citizens that live in rural and peripheral areas of Bogotá, far from a Care Block, the city has implemented Care Buses to guarantee mobility and access to services. 2) "Unidades Móviles de Cuidado" (Mobile Units of Care) are equipped vehicles offering care in remote areas where "Manzanas de Cuidado" aren't available, proving in-home care. A pilot project with two mobile units began in 2020. Both modalities offer flexible training options for caregivers, such as personal development, self-care, income generation and engagement / political participation. Currently Bogotá counts with 23 Care Blocks. 45 Care Blocks are expected to be launched by 2035, of which 20 of them are expect to be completely implemented by the end of the current administration.
Source: (OECD, 2023[30]; OPSI, 2022[36])
References
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