Great news! Learn about the key points of the historic bill approved by Congress to increase the monthly minimum wage
The monthly minimum wage will rise to $380,000 Chilean pesos (US$456) in May and $400,000 pesos (US$481) on August 1, the highest increase in 29 years. The bill also includes a series of measures aimed at providing relief to Chileans who have been affected by the rise in prices.
It was a historic day in Congress, as the Government’s Monthly Minimum Wage increase bill was unanimously approved. It will be the largest increase in 29 years, making it a real help and a standard of dignity for millions of families in the country.
This positive outcome was achieved thanks to dialogue between the Workers’ United Center of Chile (CUT), micro, small and medium enterprises (MSMEs) and the Government. The parties agreed upon a proposal that focuses on people and support at a crucial time. The proposal forms part of the Chile Apoya, Plan de Recuperación Inclusiva (Chile Supports, Inclusive Recovery Plan).
The final proposal establishes that from May 1, the monthly minimum wage will be $380,000 pesos (US$456), rising to $400,000 pesos (US$481) on August 1.
In addition, a series of improvements to the original bill were included, such as an increase in the temporary subsidy provided to micro, small and medium enterprises. Accordingly, from August, when the monthly minimum wage increases from $380,000 to $400,000 pesos, support for MSMEs will be set at $26,000 pesos (US$31) per worker covered by the increase, instead of remaining at $22,000 pesos (US$26) as originally contemplated.
An “intermediate step” is also created, where an increase to $32,000 Chilean pesos (US$38) will be provided in the event that a positive readjustment to the monthly minimum wage goes into effect in January 2023. This would happen were annual inflation to increase by more than 7% as of December 2022.
The decreasing adjustment for higher sales is eliminated, in order for all MSMEs to receive the same contribution, regardless of their sales performance.
In addition, the Guaranteed Minimum Income (Ingreso Mínimo Garantizado, IMG) subsidy is being simplified by requiring only one application for the benefit, instead of the current monthly request. The benefit will also no longer be readjusted according to the hours of work carried out.
Finally, the Protected Basic Food Basket (Canasta Básica Protegida) will be extended from December of this year until April 2023. Households with dependents who do not receive the Family Allowance (Assignación Familiar) or the Single Family Benefit (Subsidio Único Familiar), but who are beneficiaries of the Security and Opportunities Program (Programa Seguridades y Oportunidades) and
Solidarity Chile (Chile Solidario) will benefit from the Basic Food Basket (Canasta Básica de Alimentos).
All these changes will imply an additional fiscal cost of around $18.2 billion pesos (US$21.8 million) in 2022 and $144.8 billion pesos (US$173.6 million) in 2023, in the event that an adjustment to the monthly minimum wage is applied, due to an annual inflation rate higher than 7% as of December 2022. Otherwise, the highest expenditure next year would be $139.2 billion pesos (US$166 million).
The bill has now passed through Congress and is ready to become law.