AUG. 1, 2022

The minimum wage increases from today: Find out about the new amounts

Law 21.456, published on May 26, 2022, in the Official Gazette, establishes that the monthly minimum wage for workers between the ages of 18 and 65 will be 400,000 Chilean pesos (approx. US$440) from August 1. In turn, an increase in the Minimum Wage Subsidy for MSMEs will also come into effect.

A new increase in the minimum wage came into effect today. It means that from now on workers between the ages of 18 and 65 will have a minimum monthly income of 400,000 Chilean pesos.

The announcement was made by President Gabriel Boric, alongside Economy Minister Nicolás Grau and Labor Minister Jeannette Jara. They stressed that this is very good news, as this level of increase has not been seen as a nominal readjustment for 29 years, and in real terms for 25 years. It is estimated that around 800,000 formal dependent full-time workers in the private sector receive the minimum wage and will thus benefit from the increase.

It should be noted that if cumulative inflation exceeds 7% by December 2022, the minimum wage will increase to 410,000 Chilean pesos (around US$450) from January 2023.

In turn, an increase in the Minimum Wage Subsidy for micro-, small- and medium-sized enterprises (MSMEs) will also come into effect in order to support them while this measure is implemented. This takes into account that 70% of the workers who receive the minimum wage work in MSMEs.

There are currently 215,393 companies in Chile that could potentially benefit from this (a total of 569,546 workers). As of July 29, 2022, the subsidy had been requested by 111,355 companies (331,422 workers), which is 48.6% of the total to be reached.

- What does the subsidy consist of?

- It is a temporary monthly subsidy (it will be given until April 2023) aimed at micro-, small- and medium-sized enterprises (MSMEs) in order to support them in paying the new minimum wage established in Law 21.456.

This subsidy goes to the company, not the worker. Workers will therefore receive their minimum wage, regardless of the company they work for.

- How much does the Minimum Wage Subsidy increase by?

- Between May and July 2022, the subsidy was 22,000 Chilean pesos (around US$24.25). It will now increase to 26,000 Chilean pesos (around US$28.65) for the August 2022 to April 2023 period, taking into account its readjustment to the minimum wage. If the annual Consumer Price Index (CPI) increases more than 7%, the minimum wage will be raised to 410,000 Chilean pesos and the subsidy will be readjusted to 32,000 Chilean pesos (around US$35.27) for the January to April 2023 period.

- What are the requirements to access the benefit?

- The MSMEs that meet the following requirements will be able to access this benefit:

  • To have formally commenced trading activities with the Internal Revenue Service (SII) as an individual or legal entity, including cooperatives, considering:
  • If the MSME began trading activities in 2021, income will be considered as proportional to the months in which it has been active.
  • If the MSME began trading activities between May and June 2022, it can access the benefit from August 2022 or from the month after it is able to show three consecutive months of business.
  • The 2021 business sales and services of the MSME requesting the benefit must be more than 0.01 UF and equal to or less than 100,000 UF (Unidad de Fomento: an indicator whose value in pesos is adjusted daily in accordance with the CPI).
  • In the case of a legal entity that is a non-profit or a community formed before April 30, 2022, it will be assumed that they it begun trading activities, without the need to prove income from sales and services.

- How to apply for the subsidy?

  • The subsidy can be applied for only once via a platform provided by the Internal Revenue Service (SII) from June 14, 2022. There is a 90-day period to apply. If the MSME began operating after April 30, 2022, there is also a 90-day period to apply.
  • After that period, the SII platform will be enabled from the tenth day of each month until the last day of said period, to consult the status of the amount and payment of the requests in process.
  • The benefit from June 2022 and each of the following months until April 2023 will be paid automatically up to the last business day of the month.
  • To access the benefit, companies only have to enter their RUT (tax number) so that the system can make the corresponding checks with information about the AFC (unemployment fund administrator) and the start of trading activities and income of the MSME, which are available from the SII (