This information is derived from the State Department's Office of Investment Affairs, Investment Climate Statement. Any questions on the ICS can be directed to EB-ICS-DL@state.gov
Last Published: 7/31/2017
An OECD report on Colombia’s labor market and social policies was published in January 2016.  The report mentions progress on labor market reforms, but cites large income inequality and structural flaws in labor market policies, despite relatively low unemployment and high labor force participation.  In 2016, the average annual unemployment rate according to official government figures was 9.2 percent, a slight increase relative to 2015’s rate of 8.9 percent.  The truck transport strike of July 2016 accounts for some of the increase, in addition to a lower dynamic of employment generation from the construction sector.  The unemployment rate is one of the highest in the region, but has steadily improved over the past several years.  Approximately 64.7 percent of the working-age population actively participates in the labor force.  According to DANE, 47.5 percent of the workforce was working in the informal economy at the end of 2016.  Colombia has a wide range of skills in its workforce, as well as managerial-level employees who are often bilingual.

Labor rights in Colombia are set forth in its Constitution, the Labor Code, the Procedural Code of Labor and Social Security, sector-specific legislation, and ratified international conventions, which are incorporated into national legislation.  Colombia’s Constitution guarantees freedom of association and provides for collective bargaining and the right to strike (with some exceptions).  It also addresses forced labor, child labor, trafficking, discrimination, protections for women and children in the workplace, minimum wages, working hours, skills training, and social security.  Colombia has ratified all eight of the International Labor Organization’s (ILO’s) fundamental labor conventions, and all are in force, including those related to freedom of association, equal remuneration, right to organize and collectively bargain, discrimination, minimum working age, forced labor, and prohibition of the worst forms of child labor.  Colombia has also ratified conventions related to hours of work, occupational health and safety, and minimum wage.  In 2013, Law 1636 was passed to increase protections and opportunities for Colombia’s unemployed population.

The 1991 Constitution protects the right to constitute labor unions.  Pursuant to Colombia’s labor law, any group of 25 or more workers, regardless of whether they are employees of the same company or not, may form a labor union.  Employees of companies with fewer than 25 employees may affiliate themselves with other labor unions.  About four percent of the country’s labor force is unionized.  The largest and most influential unions are composed mostly of public-sector employees, particularly of the majority state-owned oil company and the state-run education sector.  According to the OECD, only 6.2 percent of all salaried workers are covered by collective bargaining agreements (CBAs)..  The Ministry of Labor is currently working on decrees to incentivize sectoral collective bargaining, and to strengthen union representation within companies and regulate strikes in the essential public services sector (i.e. hospitals).

Strikes, when held in accordance with the law, are recognized as legal instruments to obtain better working conditions, and employers are prohibited from using strike-breakers at any time during the course of a strike.  After 60 days of strike action, the parties are subject to compulsory arbitration.  Strikes are prohibited in certain “essential public services,” as defined by law, although Colombia has been criticized for having an overly-broad interpretation of “essential.”  In July-August 2016, a 45-day strike by truck transport associations impacted the Colombian economy, clogging ports, slowing agricultural exports, and increasing inflation.  The strike was motivated by the truckers’ desire to restrict the import of new vehicles.  They alleged that excess transport capacity reduces the value of their own vehicles and affects their profitability.  The strike ended with an agreement between the truckers and the government on cargo prices and modifications to the “scrappage” policy that regulates the import of new vehicles.

Foreign companies operating in Colombia must follow the same hiring rules as national companies, regardless of the origin of the employer and the place of execution of the contract.  No labor laws are waived in order to attract or retain investment.  In 2010, Law 1429 eliminated the mandatory proportion requirement for foreign and national personnel; 100 percent of the workforce, including the board of directors, can be foreign nationals.  Labor permits are not required in Colombia, except for under-aged workers.  Foreign employees have the same rights as Colombian employees.  Employers may use temporary service agencies to subcontract additional workers for peaks of production.  Employers must receive advance permission from the Ministry of Labor before undertaking permanent layoffs.  The Ministry of Labor typically does not grant permission to lay off workers who have enhanced legal protections (those with work-related injuries or union leaders, for example).  The Ministry of Labor has been cracking down on using temporary or contract workers for jobs that are not temporary in nature.

Reputational risks to investors come with a lack of effective and systematic enforcement of labor law, especially in rural sectors.  In 2016, the Ministry of Labor imposed sanctions to around 1,000 companies for over USD 29 million for violations of labor law, including subcontracting and occupational health and safety violations as well as violations of freedom of association.  The value of fines imposed against employers in 2016 was around 130 percent the value of fines imposed in 2015.  The Ministry of Labor has publicly highlighted improvement in the increase of number of labor inspector positions, from 524 in 2011 to 904 in 2016, and an increased number of imposed sanctions.  The Ministry has also highlighted increased social dialogue.  Between 2011 and 2015, the number of collective bargaining conventions increased 165 percent, while collective pacts decreased 14 percent in the same period.  Homicides of unionists have decreased in recent years but remain a concern.  In January 2017, the U.S. Department of Labor issued a public report of review in response to a submission filed under Chapter 17 (the Labor Chapter) of the CTPA by the American Federation of Labor and Congress of Industrial Organizations and five Colombian workers’ organizations that alleged failures on the part of the government to protect labor rights in line with CTPA commitments. 

For additional information on labor law enforcement see Section 7 of Colombia’s Human Rights Report, and the Department of Labor’s Findings on the Worst Forms of Child Labor and Lists of Goods Produced with Child or Forced Labor.

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Colombia Economic Development and Investment Law