As discussed in the OECD accession review of labour market, social and migration policies in Colombia (OECD, 2016[4]), trade union density and collective bargaining coverage are very low compared to OECD standards. In addition, collective bargaining in the private sector was substantially affected by the global pandemic and has still not fully recovered. Only 340 new collective agreements were signed in 2023, which is barely 60% of the agreements in 2019 and fewer than in 2017 when 380 agreements were concluded (Figure 3.1). In the public sector, the number of collective agreements remained stable at around 314 agreements between 2018 and 2021 but declined drastically in 2022 and has not fully recovered by 2023, when 246 agreements were signed (Figure 3.1).1
OECD Reviews of Labour Market and Social Policies: Colombia 2024
3. Collective bargaining
Recommendations in the Formal Opinion of ELSAC
Figure 3.1. Collective bargaining has not fully recovered from the impact of the pandemic
Number of collective agreements in the private and public sector and number of collective pacts, 2017‑23
Source: Data provided by the Ministry of Labour.
Colombia has ratified all fundamental ILO conventions and recognises freedom of association in the Constitution and Labour Code. However, significant obstacles remain to the free association of workers in trade unions and the recognition of unions by employers. The Employment, Labour and Social Affairs Committee of the OECD made a series of recommendations in its 2018 Formal Opinion on Colombia’s accession to the OECD to strengthen collective bargaining in the country. See Box 3.1 for an overview.
Box 3.1. Recommendations on collective bargaining
Build a constructive framework for social dialogue, by:
Promoting a two‑tier system of sectoral and firm-level bargaining, by elaborating the regulations on sectoral bargaining in the Labour Code;
Eliminating the option to negotiate collective pacts;
Extending collective agreements automatically to all employees of a company, not only to the members of the signatory trade unions (erga omnes);
Requiring multiple trade unions in the same company to form a bargaining team to ensure a single collective agreement;
Giving the right to strike to higher-level trade union organisations;
Ensuring that all workers, irrespective of the legal status under which they work, can join trade unions in practice;
Systematically collecting data on collective bargaining to track evolution.
In addition, Colombia should reflect on alternatives to the full prohibition of strikes in essential services (e.g. strikes conditioned on a minimum-service requirement) and consider reintroducing mediation in the collective dispute resolution process.
With better social dialogue and reinforced collective bargaining, Colombia could consider a gradual adjustment of the very high minimum wage to bring it back to its original role of wage floor instead of wage norm.
Source: OECD (2018[3]), Accession of Colombia to the OECD: Formal Opinion of the Employment, Labour and Social Affairs Committee, unpublished report.
Reform proposal to the Labour Code
In August 2023, the Colombian Government presented a wide‑reaching labour market reform proposal, which is currently under discussion (see Chapter 1). The proposal prominently features OECD recommendations in this area. The following sections discusses the key elements of the reform proposal.
Framework for sectoral bargaining
The 2016 OECD Review of Colombia identified a regulatory vacuum concerning sectoral bargaining in the country (OECD, 2016[4]). Even though the labour code allows higher-level trade union organisations (such as industrial unions, federations, and confederations) to sign collective agreements, in practice, sectoral or regional bargaining hardly occurs. The OECD suggested promoting a two‑tier system of sectoral and firm-level bargaining, by elaborating the regulations on sectoral bargaining in the Labour Code (Box 3.1). This recommendation was reiterated in the post-accession review carried out in 2022 (OECD, 2022[23]).
The labour reform proposal currently under discussion includes a provision to promote and guarantee the free exercise of collective bargaining at all levels. The proposal would allow the Ministry of Labour to develop a legal framework for collective bargaining according to the international standards and ILO criteria. It also proposes that collective bargaining would not be hindered due to the absence of specific rules. Finally, the proposed article recognises the special circumstances of small firms participating in sectoral bargaining, aiming to guarantee the effective participation of their representatives and the inclusion of special clauses for them.
Some stakeholders in Colombia are concerned about the potential impact of a two‑tier bargaining structure on small firms, who may not be able to achieve the standards agreed upon at the higher level. As outlined in the OECD report Negotiating Our Way Up: Collective Bargaining in a Changing World of Work (OECD, 2019[24]), this issue has been addressed in different ways by OECD countries, from which the Colombian Government could take inspiration. For instance, some OECD countries do not include the favourability principle in their legal frameworks – which states that a lower-level agreement can only take precedence over a higher level agreement if it improves the terms of employment for workers – or leave it up to the negotiators), thus allowing unions and firms to negotiate agreements that set lower standards than the sector-level agreement. OECD countries that do adopt the favourability principle, include the possibility for small firms to use either derogations, opening clauses or opt-out clauses from the terms set by collective agreements they have not negotiated.
The OECD report Negotiating Our Way Up divides deviations from higher level agreements into general opening clauses and temporary opt-out clauses (also called hardship clauses, or inability-to-pay clauses) (OECD, 2019[24]). General opening clauses allow firm-level agreements to deviate from the minima or the standards set in higher level agreements (for instance, to lower collectively agreed wage floors, increase working time, or change work organisation). Temporary opt-out clauses allow the suspension (or renegotiation) of the terms of agreement (even firm-level agreements) in cases of economic difficulties.
Right to strike
The 2016 OECD Review of Labour Market and Social Policies in Colombia noted that the right to strike in Colombia is overly strict due to the existence of two legal prohibitions (OECD, 2016[4]). First, in contrast to most OECD countries, the Colombian Labour Code forbids federations and confederations to organise strikes. Second, Colombia falls into the group of the more restrictive OECD Member countries that consider the strikes are illegal when the dispute arises in services considered essential. In 2016, the OECD suggested: 1) giving the right to strike to higher-level trade union organisations, and 2) reflecting on alternatives to the outright prohibition of strikes in public and essential services, such as introducing a requirement of minimum service (OECD, 2016[4]).
The recent reform proposal to the Labour Code would tackle both issues. On the one hand, the reform would eliminate the restriction for the federations and confederations to organise strikes, giving them the same rights as the firm-level unions. On the other hand, the proposal defines the strike as the legal right of workers to stop work in defence of their rights and removes the prohibition of strikes in public and essential services, including: 1) a definition of essential services, 2) the requirement to guarantee a minimum service to avoid the complete interruption of service provision, and 3) a procedure to reach an agreement between employers and workers on the required minimum service provision. These proposed measures would meet the OECD recommendations made in previous reviews.
An additional obstacle for the strike in Colombia is the clause stipulating compulsory arbitration after 60 days of strike action (OECD, 2016[4]). The reform proposal also addresses this issue, abolishing this condition and recognising the trade union’s autonomy to decide when to end the strike or whether arbitration is required.
Trade union fragmentation
As described in the OECD Reviews of Labour Market and Social Policies in Colombia (2016[4]; 2022[23]), trade union fragmentation complicates the bargaining process in the country. To avoid the adverse effects of having multiple collective bargaining processes, the OECD recommended building a constructive framework for social dialogue in Colombia, including a requirement for multiple trade unions in the same company to form a bargaining team to ensure a single collective agreement (OECD, 2016[4]; 2022[23]). This approach has been included in the reform proposal to the Labour Code, which proposes collective bargaining at all levels to start with a single list of demands, led by a single bargaining team, at a single negotiation table, and end with a single collective agreement.
Collective pacts
The Colombian legal framework allows employers to negotiate and reach collective pacts with non-unionised workers as long as trade unions represent less than one‑third of the company’s workforce. This particular provision is not widespread among OECD countries, with exceptions found in Chile and Mexico (OECD, 2016[4]; 2022[23]). The potential misuse of collective pacts with non-unionised workers poses a concern, as it can undermine the work of trade unions in companies and prevent the emergence of new unions (OECD, 2022[23]).
In 2017, the Ministry of Labour strengthened the inspection of collective pacts and set up a Special Investigative Unit to investigate complaints related to the misuse of collective pacts (OECD, 2022[23]). In February 2024, the Special Investigative Unit formally accused a large dairy products company of promoting a collective pact with non-unionised workers without compliance with the existing legal requirements.2 However, both the number of complaints and the number and value of fines have been declining over the years, with just one fine imposed in 2023 for a value of EUR 2000. In the meanwhile, the number of collective pacts signed each year has been fluctuating between a low of 90 pacts in 2020 and a high of 203 pacts in 2019, eventually returning to the 2017 level by 2023 (Figure 3.1).
The labour market reform proposal presented by the government in August 2023 includes a prohibition of collective pacts, though only when trade unions already exist in the company. The proposed article would thus not address the risk of misuse of collective pacts to discourage the emergence of new trade unions; trade union federations have agreed to the current proposal.
Remaining challenges
Extensions within firms
Unlikely most OECD countries, collective agreements in Colombia are only extended to all employees of a company if the trade union that negotiated the contract represents more than one‑third of the company’s workforce. This issue was highlighted in the OECD Review of Labour Market and Social Policies in Colombia in 2016 (OECD, 2016[4]), and reiterated in the post-accession review in 2022 (OECD, 2022[23]). The OECD suggests to automatically extend the collective agreements to all employees of a company, and not only to the members of the signatory trade unions (the erga omnes principle), irrespective of the size of the trade union and even if there is no statutory regulation on the subject. This measure was not included in the labour market reform proposal.
Multi‑affiliation
Colombia allows employees to affiliate to multiple trade unions, even within the same firm. Researchers from the University of Ottawa found that “the increased multi‑affiliation rate among union members in Colombia has weakened collective negotiation bargaining power and caused hyper-fragmentation within labour organisations” (Le Bouthillier, Torres and Ovalle Díaz, 2022[25]). The reform proposal includes a provision to allow trade unions to ban the multi‑affiliation in the same level or firm, however, but does not prohibit multi‑affiliation by law.
Mediation in industrial disputes
The Colombian Labour Code does not include provisions for mediation of industrial disputes in the private sector. Even though OECD countries have positive experiences with conciliation and mediation (OECD, 2016[4]), the reform proposal that is currently under discussion in the Colombian Congress does not incorporate such provisions. As recommended in the first Review of Labour Market and Social Policies in Colombia (OECD, 2016[4]), the government may consider reintroducing mediation in the collective dispute resolution process, ideally organised by an autonomous body that is respected by both the trade unions and the employers.
That said, disputes in the areas of freedom of association and collective bargaining that cannot be solved by any other instance can be submitted to the Special Committee for the Handling of Conflicts referred to the ILO (CETCOIT). The Committee has allowed the discussion of cases between employers’ organisations, workers and a conciliation body. Of the 285 cases that were closed between 2012 and 2022, an agreement was reached in 67% (Ministry of Labour, 2024[22]). Over the past year, however, the process has stalled due to the delay in the appointment of a new facilitator. Of the 50 cases covered by CETCOIT in 2023, 45 cases remain open, only four were closed reaching an agreement and one without agreement (Ministry of Labour, 2024[22]).
As identified by researchers from the University of Ottawa, there is a need to create or strengthen a broader dispute resolution system beyond CETCOIT that is effective and fast (Le Bouthillier, Torres and Ovalle Díaz, 2022[25]). Inspiration on mediation and arbitration procedures in other OECD countries can be found in the OECD report on Negotiating Our Way Up: Collective Bargaining in a Changing World of Work (OECD, 2019[24]).
Minimum wage
As described in the OECD Review of Labour Market and Social Policies in Colombia (OECD, 2016[4]), the minimum wage in Colombia has become the wage norm for many formal, and even for half of all informal employees. At 90% of the median wage and 62% of the mean wage of full-time formal employees, the minimum wage is much higher in relative terms than in any other OECD country and a substantial barrier to the formal labour market for many workers (OECD, 2022[1]). In January 2024, the minimum wage was further raised by 12%, close to the annual inflation rate for 2023 (11.7%). However, the difference between the minimum wage increase in January 2023 (16%) and annual inflation in 2022 (10.2%) was much larger.
While the OECD recognises in a recent publication on Minimum wages in times of rising inflation (OECD, 2023[26]) that the most direct way to limit the impact of inflation on workers is via an increase in their wages, minimum wage increases in Colombia should be used with great caution, to avoid pricing low-skilled workers out of the formal labour market. In line with the recommendations in the Formal Opinion of the Employment, Labour and Social Affairs Committee on Colombia’s accession to the OECD (OECD, 2018[3]), the OECD encourages the government to consider a gradual adjustment of the very high minimum wage compared to the median and mean wage levels, and bring it back to its original role of wage floor instead of wage norm. Improved social dialogue and collective bargaining would help to ensure decent working conditions for workers and ultimately higher median and mean wages, through other means than a high minimum wage.
Conclusion
Colombia has ratified all fundamental ILO conventions and recognises freedom of association in the Constitution and Labour Code. However, significant obstacles to constructive social dialogue and collective bargaining persist. 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, or reassess the role of the minimum wage. Furthermore, additional mechanisms for mediating industrial disputes are needed to effectively address collective conflicts.
Notes
← 1. The very low number for 2022 may be explained by a major collective bargaining process with all trade union confederations that was completed in August 2021, benefiting around 1.2 million workers in the public sector for two years (OECD, 2022[23]).