Colombian Congress Approves Labor Reform, Increases Costs to Coffee, Cocoa Growers
Colombian Congress Approves Labor Reform, Increases Costs to Coffee, Cocoa Growers
Bogota (Coffee Network)- The Colombian Congress has fully approved the labor reform which increases obligations and costs for agricultural producers including coffee and cocoa producers but boosts worker protections.
The Colombian lower house and the senate reconciled the versions of the labor reform on June 20, and the country’s president Gustavo Petro is expected to sign the bill this week.
As congress approved the bill, Petro canceled a referendum on labor reforms.
Higher costs
With the new bill, Colombians will work 42 hours. Currently, labor laws dictate a 48-hour workweek, overtime regulations, minimum wage, paid vacations, sick leave, maternity and paternity leave, workplace safety, and union rights. Colombians will also enjoy at least one day off every seven days in line with international norms.
Surcharges will be paid starting 7:00 p.m. local time, compared with 9:00 pm. currently.
For Sunday and holiday work it increases the pay progressively from 75pc to 100pc over three years (80pc in 2025, 90pc in 2026, and 100pc by 2027)
In addition, indefinite contracts become the norm; fixed-term contracts face stricter limits. As a result, fixed-term contracts will automatically convert to indefinite if extended more than four times or exceed five years, which implies less flexibility in scaling or seasonal hiring for employers and higher long-term obligations. Meanwhile, it limits the use of outsourcing and temporary services, a practice the coffee and cocoa farmers use widely.
Colombia’s large coffee grower Juan Alvaro Arboleda said the approval of the bill is disastrous for farmers.
“We have always asked for a different legislation for the agricultural sector. For instance, pickers pick more coffee at night than during the day and that increases the costs to us. To meet the increased costs, coffee should be trading at $5-to $6 per pound,” he said.
Effects
Although the reform seeks to guarantee labor rights and combat informality, sectors such as agriculture fear that the new regulations, especially the elimination of certain temporary contracts, could affect the sector's flexibility and profitability, particularly in seasonal agricultural production.
The reform seeks to formalize agricultural labor, which is positive in terms of labor rights, but could also increase labor costs for employers, especially for small and medium-sized agricultural businesses.
Temporary contracts: The elimination of contracts for work or services, with no correlation between the temporary nature of the contract and the work, could affect the flexibility needed for seasonal agricultural activities such as planting and harvesting.
Impact on production: Some sectors, such as the coffee sector, which depend on temporary labor, fear that the reform will make it difficult to hire workers at key stages of production.
Additional Challenges:
The agricultural sector already faces challenges such as the effects of Free Trade Agreements (FTAs), high input costs, expensive credit, lack of infrastructure, and climate change, and the reform could exacerbate these problems.
There is concern that the labor reform, by increasing labor costs, could affect the productivity and competitiveness of the agricultural sector.
Job Cuts
But the Colombian central bank says the law will cut 450,000 jobs between three to four years.
The end on outsourcing and the hiring of temporary services, a practice highly used by coffee producers. Once the provision of temporary services, which will have a maximum duration of one year, is completed, it will not be possible to extend the contract or hire with a different temporary services company, law firm Béndiksen said.
Coffee growers will be obliged to fully hire pickers, a practice that will make unfeasible to grow coffee. Currently, coffee pickers weight 50% of total costs.
A load of 125kg of coffee is being paid at COP2.652 million pesos ($650), of that COP850,000 are earmarked to pay coffee pickers, who earn a salary based on how much coffee is picked.
President Gustavo Petro’s labour reform aims to “formalize” that labour force by obliging coffee growers to hire the pickers.
It also aims to strengthen workers’ associations and labor unions
By Diana Delgado
